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June 04 B&Q: Blame it on the weather
So it is with mixed feelings that he notes today’s first quarter trading statement from its parent company Kingfisher. Group like-for-like sales at the retailer, which also owns Castorama in France, were down 4.1 per cent in the 13 weeks ending 3 May, and were particularly abysmal in the UK, where like-for-likes slipped by 7.9 per cent. Kingfisher blames poor spring weather, compared to the mini heat wave we experienced this time last year, and the early Easter for keeping away customers. If in doubt, retailers are wont to blame their woes on God and his elements which, of course, can’t argue back. But while the shares are down by just over 2 per cent today, analysts say the retailer’s figures are actually more cheery than they anticipated. Like-for-like sales, while ostensibly grim, were in line with expectations and gross margins healthier than expected. And chief executive Ian Cheshire says the performance of its revamped B&Q stores and new products has actually improved, while he is busy trying to turn around the company’s Chinese operation. On the down side, however, Nick Coulter, analyst at broker Numis, sees more gloom to come courtesy of the housing market. “While beating low profit expectations we think the macro, and particularly the recent deterioration in the UK housing market, has yet to feed through,” he says, maintaining his reduce recommendation on the shares. Meanwhile the FTSE100 is blood red and worryingly dipped below the 6,000 mark to 5964 this morning. House building stocks are down, hit by downgrades from investment bank UBS, which predicts house prices will dip by as much as 20 per cent. While financial stocks continue their daily struggle, not helped by rumours of a possible rights issue from Lehman Brothers, and energy company shares have also hit the skids due to the falling oil price. Batten down the hatches!
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