Consumers' caution hits sales at B&Q chain

KINGFISHER, the DIY giant that owns B&Q, has warned that quarterly sales at its core UK business remain under pressure as cash-strapped shoppers put off "big-ticket" purchases.

The retailer's decision to run fewer promotions contributed to the downturn as B&Q's like-for-like sales slid 4.3 per cent in the ten weeks to 10 July, compared with a drop of 2.8 per cent in the first quarter of its financial year.

A stronger performance in France, where the group operates under the Castorama and Brico Depot banners, helped stem the overall drop in same-store sales to 0.8 per cent in the quarter.

Group chief executive Ian Cheshire described the performance as "solid" amid an "uncertain environment" across Europe.

He said pressure on consumer spending was most noticeable in the UK, where B&Q has run targeted promotions in order to drive profitable growth and has "vigorously" controlled its costs.

Sales of seasonal categories were flat and demand for kitchens, bathrooms, bedrooms and larger building categories fell as a result of fewer promotions and weak consumer appetite for bigger ticket purchases. At the other end of the price scale, B&Q sold 5,000 World Cup garden gnomes.

Kingfisher, which runs more than 800 stores across eight countries, added that the roll-out of its TradePoint in-store merchanting initiative into bigger B&Q outlets also disrupted trading.

The group, which has spent 30 million on the TradePoint offer, hopes it will boost its current low share in the professional trade market and is aiming for national coverage by the end of the summer.

Investec Securities said the update was mixed, with weaker-than-expected like-for-like sales offset by positive gross margins.