May 1, 2008 / 7:07 AM / 12 years ago

UPDATE 2-Galiform kitchen sales shrug off property gloom

(Reledes, adds analyst comment, shares)

By Chris Wills

LONDON, May 1 (Reuters) - UK kitchen maker Galiform Plc GFRM.L said on Thursday consumers were still splashing out on big home improvements, despite the gloomy property market outlook, sending its shares surging.

The company said like-for-like sales had risen 6 percent so far this year, pushing its shares up over 7 percent to 73.5 pence, making it one of the biggest mid-cap gainers .FTMC in the London market.

Shares in the company, which operates under the Howden Joinery banner, have fallen around 58 percent since last April’s peak on fears that householders would slash spending on expensive home improvements, particularly if they do not expect house prices to rise.

Howden Joinery supplies kitchens and appliances to small building companies who install them for homeowners.

Analyst Steve Oldfield at brokerage Cazenove, who has an “outperform” rating on the stock, said Howden shares had been weak in the run-up to the trading statement, and he expected a rally by way of response.

Broker Panmure Gordon analyst Christian Koefoed-Nielsen, who has a sell recommendation on the shares, said: “I think they were a good set of sales figures compared to the rest of the retail sector.”

Like-for-like sales growth fell from 7.1 percent in the first eight weeks of the period from Dec. 30 to April 19 to finish off 5.9 percent higher for the period against tougher comparative figures a year ago.

Koefoed-Nielsen, who has a 60p price target, expects an economic slowdown to hit Galiform’s sales in the medium term and believes the effects are yet to hit.

Total sales grew 11 percent in the period, including sales from eight new depots.

“In a less certain economic environment, I am pleased to report that Howdens has continued to trade well,” said Galiform Chief Executive Matthew Ingle in a statement.

Both Cazenove and Panmure said they would not change full-year pretax profit forecasts of 87 million pounds ($173 million) and 81.7 million pounds, respectively.

Galiform changed its name from MFI Furniture Group in 2006 after the disposal of its loss-making furniture retail unit MFI to private equity firm Merchant Equity Partners for 1 pound. (Editing by Will Waterman)

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