Kingfisher shares slump on restructuring costs and weak sales in France

Shares in Kingfisher slumped over 6% early on Wednesday (24 May), after the owner of B&Q and Screwfix said weak sales in France and restructuring costs had impacted sales.

Like-for-like sales in the first three months of the year slid 0.3% from the corresponding period 12 months ago, but total group sales rose 5% to £2.86bn ($3.71bn).

The decline in like-for-like sales was driven by a 5.5% drop in sales at Castorama and Brico Depot, the company's French divisions, and Kingfisher added it remained cautious over the outlook of its business in France.

However, the group's Screwfix business in the UK saw sales surge 20.3% year-on-year. Like-for-like sales on a constant currency basis, meanwhile, were 12.6% higher than in the corresponding period 12 months earlier.

In January last year, the FTSE 100-listed company unveiled a five-year overhaul aimed at increasing profits by £500m. The plan, which is expected to cost £800m and includes a revamp of the company's online business, remains on track.

"We remain confident in the size of the prize and our ability to deliver our long-term plan," said group chief executive Veronique Laury.

"Strong performance in Screwfix and Poland continues, though performance in France remains weak.

"In addition, we are experiencing some business disruption given the volume of change, as we clear old ranges, remerchandise new ranges and continue the roll out of our unified IT platform."

Neil Wilson, senior market analyst at EXT Capital said France remained a sore point for the company.

"Castorama and Brico Depot considerably underperformed and as previously stated Kingfisher may consider offloading its French business if it continues to degrade shareholder value and act as a drag on the strong UK business much longer," he said.