Retailer beats analysts' estimates

Kingfisher Plc, Europe's largest home-improvement retailer, said first-quarter profit climbed 8.9 percent, beating analysts' estimates, after it offered fewer promotions and reduced costs.

Earnings before interest and tax rose to 96 million pounds in the three months ended May 3 from 88.6 million pounds a year earlier, the London-based company said yesterday. That beat the average estimate of eight analysts surveyed by Bloomberg, who expected profit to fall to 83.3 million pounds. Kingfisher didn't report net income.

Sales declined 8.1 percent at UK stores open at least a year in the retailer's B&Q chain after the coldest April since 2001 hurt sales of barbeques and garden furniture. At the same time, house purchases are slowing as prices drop and banks make fewer mortgage loans, cutting into spending typically involved in readying dwellings for sale or remodeling them after moving in.

"These will compare with results achieved last year in a more buoyant economy and housing market, and with the sun shining to encourage gardening and external do-it-yourself projects," David Jeary, an analyst at Investec Securities in London who advises selling Kingfisher stock, wrote in a research report last Thursday. "This year has seen the exact opposite."

The gross margin, a profitability benchmark, widened by about 3 percentage point in the United Kingdom, yesterday's statement shows.

Kingfisher hired the head of Hutchinson Whampoa Ltd's Superdrug pharmacy chain in April to help revive its domestic division.

Wet weather

Kingfisher gained 4.7 pence, or 3.5 percent, to 138.8 pence in London trading on Tuesday. The stock has lost 4.7 percent in 2008, the smallest drop in the FTSE 350 General Retailers Index, after sliding 39 percent last year.

UK rainfall was double the average in April, according to the Meteorological Office. A gauge of local consumer sentiment fell in May to the lowest level since 1990, GfK NOP Ltd has said. Mortgage approvals slid to the lowest in at least nine years in April, Bank of England figures show.

Same-outlet sales also are retreating at Wickes, the B&Q rival owned by Travis Perkins Plc. Pressure on the industry forced Ian Cheshire, who became Kingfisher's chief executive officer in January, to cut the second-half dividend by 50 percent in March and forecast an equal drop for the current year's first half.

Agencies

(China Daily 06/05/2008 page16)