Weak performance of Castorama darkens Q3 2018 outlook for Kingfisher

Kingfisher, Europe’s second largest home improvement retailer, said prolonged warm weather lifted sales but the weak performance of its French business Castorama darkened its outlook.

According to a report on Reuters, a warm summer helped group underlying sales rise 1.6 percent in the three months to July 31, Kingfisher’s second quarter, with hosepipes and fans in particular demand. The sales rebounded from a 4 percent decline in the first quarter, when winter snow storms had hurt the business.

Kingfisher said it was on track to deliver on its “strategic milestones” for this year, but its shares dropped 3 percent to 280 pence after the trading statement as analysts said that struggling Castorama, where quarterly underlying sales fell 3.8 percent, would weigh on annual results.

Kingfisher said it was pleased with the recovery at its B&Q and Screwfix businesses in Britain and that it would take steps to improve Castorama.

“The performance of Castorama France has been more difficult and as a result we have put additional actions in place to support our full year performance in France with the benefits expected to come through in the second half,” Chief Executive Veronique Laury said in a statement.

Kingfisher, which across Europe trails France’s Groupe Adeo, is in the third of a five-year plan to boost annual profit by 500 million pounds from 2021. Laury said she would provide a more detailed update at half-year results in September.