* 10 weeks to July 12 total sales up 0.8 pct
* Like-for-like sales down 1.8 pct
* Markets slower than expected, particularly France and
* Shares biggest fallers on pan-European index
(Adds detail, executive, analyst comment, shares)
By James Davey
LONDON, July 24 Kingfisher, Europe's
largest home improvements retailer, suffered a sharp slowdown in
trading in June, particularly in France and Poland, and said on
Thursday it did not know why.
The firm, which runs the B&Q and Screwfix chains in Britain
and Castorama and Brico Depot in France and other markets, had
forecast a slowdown in its second quarter from the first, which
was boosted by warm weather, and a strong year-ago period.
"However, our markets in Q2, notably in June, have been
slower than anticipated particularly in France and Poland,"
Chief Executive Ian Cheshire said.
Kingfisher shares were down 7 percent in morning trade, the
biggest fallers on the pan-European FTSEurofirst 300
index, taking the drop over the last year to 20 percent.
"It is unclear whether this recent weakness is short term
phasing in nature, though we will know more by our interims in
September having then traded through our key summer months,"
The company, which makes half its profit in France, noted
Banque de France data showing sales for the overall home
improvement market in that country rose 0.3 percent in May but
fell 4.3 percent in June. That possibly reflected consumer
uncertainty over the government's fiscal policy
Kingfisher, No. 3 in the world by sales behind U.S. groups
Lowe's and Home Depot, trades from 1,134 stores
in nine countries in Europe and Asia.
Cheshire said the firm was accelerating margin and cost
initiatives to help support performance. Second-quarter gross
margins were up in all markets.
Prior to Thursday's update, analysts were on average
forecasting a pretax profit for 2014-15 of 780 million pounds.
Espirito Santo Investment Bank analyst Tony Shiret, who has
a "sell" rating on the stock, expects consensus estimates to
reduce by around 2-3 percent.
"Numbers-wise the issue is to what extent this revised level
may keep slipping despite the probability that the group has
moved onto a more defensive trading footing," he said.
Kingfisher's total sales rose 0.8 percent in constant
currencies in the 10 weeks to July 12 and were down 1.8 percent
at stores open over a year.
Total like-for-like sales had risen 6.1 percent in the first
quarter as warm weather drove outdoor and seasonal products like
Like-for-like sales at B&Q were down 3.2 percent over the
10-week period, compared with analysts' consensus forecast of a
fall of 1.5 percent and a rise of 9.7 percent in the first
Sales on the same basis were down 0.9 percent at Castorama
and 3.8 percent lower at Brico Depot, compared with analyst
forecasts of up 0.6 percent and down 2.5 percent respectively.
Like-for-like sales in Poland fell 3.5 percent.
Kingfisher said in April it had entered exclusive
negotiations to buy smaller French rival Mr Bricolage.
It said on Thursday the deal had become binding and would
progress to anti-trust clearances.
($1 = 0.5872 British Pounds)
(Reporting by James Davey; Editing by Erica Billingham)