* Says to meet analysts profit forecast of 715 mln stg
* Made profit of 807 mln stg in 2011-12 year
* Q4 like-for-like sales down 3.4 pct, worse than Q3
* B&Q lfl sales down 6.4 pct in fourth quarter
* Shares down 0.9 pct
By James Davey
LONDON, Feb 21 Kingfisher Plc, Europe's
No. 1 home improvements retailer, is looking to further
efficiency savings to offset a worse than expected sales fall
and allow it to meet forecasts for yearly profit.
The group, which runs market leader B&Q in Britain and
trades as Castorama and Brico Depot in France, is suffering
along with other European retailers of "big ticket" items like
kitchens and bathrooms, which are particularly vulnerable to
fragile consumer confidence.
Yet the company is offseting weak demand with a drive to
improve profitability by buying more goods centrally, and
directly, from cheaper manufacturing centres such as China.
It wants to increase common sourcing for all its brands from
2 percent to 50 percent and boost direct sourcing - or buying
straight from manufacturers instead of via third-party
distributors - to 35 percent from 15 percent.
"We have had a tough fourth quarter, ending what has been a
tough year impacted by unfavourable foreign exchange,
particularly poor weather in the UK and weaker consumer
confidence in our major markets," said Chief Executive Ian
But Cheshire said the group, the world's No. 3 home
improvements retailer behind U.S. groups Lowe's and Home
Depot, was still winning market share and benefiting from
its self-help initiatives.
Kingfisher, which trades from over 1,000 stores in eight
countries in Europe and Asia, is also being squeezed by a
continuing low level of housing transactions, since moving house
is often associated with spending on home improvements.
It said fourth-quarter sales at stores open for more than a
year fell 3.4 percent, deteriorating from a third-quarter
decline of 2.8 percent.
But underlying pretax profit for the year to Feb. 2 would be
in line with analysts' consensus forecast of 715 million pounds
($1.1 billion), it said.
That outcome would be 11 percent below the 807 million
pounds made in the previous year, but analysts' forecasts for
2012-2013 had been trimmed after British rival Homebase, owned
by Home Retail Group Plc, posted a poor sales update in
Shares in Kingfisher, which have proved resilient to the
tough economic backdrop and remain not far from a seven-year
high of 317 pence set last year, were down 0.9 percent by 1029
GMT, valuing the business at 6.5 billion pounds.
In Britain and Ireland, B&Q's like-for-like sales fell 6.4
percent in the fourth quarter, worse than analysts' consensus
forecast of down 4.5 percent and reflecting the weak consumer
backdrop - particularly in Ireland, where its nine stores are
subject to an examinership, akin to administration in Britain.
In France like-for-like sales fell 0.4 percent at Castorama
and 4.6 percent at Brico Depot. Analysts' consensus was for
declines of 1.6 percent and 5.3 percent respectively.
The firm said margins in both Britain and France would be
down, partly reflecting price cuts to drive trade.
Evidence of the sector squeeze had already come on Wednesday
when Wickes, part of Travis Perkins Plc, posted a 7.6
percent decline in like-for-like sales over the first seven
weeks of its new financial year
Some sector observers see underlying problems which B&Q's
self-help measures will do little to address.
"It will be interesting to hear (with full year results) on
March 26 what the management think about the over-capacity in
the UK DIY market and whether the collapse of its business in
Ireland is a sign of things to come across this side of the
Irish Sea," said independent retail analyst Nick Bubb.