LONDON (ShareCast) - (ShareCast News) - Home improvement retailer Kingfisher showed improved like-for-like sales in the third quarter as management kept a lid on earlier disruption from turnaround plans.
Group total sales rose 3.0% in the three months to 31 October, although removing the benefit from currency changes and store openings, meant LFL sales were down 0.5%, which was up from the 1.3% hammering taken in the first half.

Weak sales in France continued to push underlying sales into negative territory, though the UK picked up and the Polish business continued to grow hammer and tongs.

"Q3 has followed a similar course to the first half," said chief executive Véronique Laury, who in January will be two years through her five-year 'One Kingfisher' transformation plan.

"We have seen strong growth at Screwfix and Poland offset by continued weak sales in France, alongside some business disruption from our ONE Kingfisher plan, principally reflecting product availability and clearance. We continue to act on the causes of this disruption, which we are confident will ease.

"We remain on track to deliver our full year strategic milestones, for the second year in a row. With plans in place to support our overall performance, we remain comfortable with full year profit expectations."

The consensus forecast for full-year profit before tax is £785m before exceptionals.

Sales in the UK and Ireland were up 2.5% in total or 1.5% on a LFL basis, with B&Q LFL sales falling 1.9% after completing its store closure programme earlier this year, while Screwfix LFL sales whirred 10.2% higher. In the first half, B&Q's LFL sales declined 2.3%, while Screwfix was up 11.7%.

Castorama and Brico Dépôt in France remained in negative territory, with combined total sales down 3.5% and LFL sales down 4.1% versus a wider French home improvement market that grew 0.6% in the quarter.

Sales in Poland rose 6.1% or 6.-% on a LFL basis amid a continued good performance in a supportive market.

Looking to the medium-term Laury said the board remain confident about delivering the long-term plan and the financial and customer benefits it will generate.

She added that early customer reaction to new product ranges "continues to be encouraging".

Kingfisher shares were down 1% by 0930 GMT on Tuesday at 301.5p, down almost 14% in 2017.

UBS analysts said B&Q and Screwfix were both a little better than expected, as was Poland, but in France the Castorama arm had tougher seasonal comparatives but Brico "shows no sign yet of benefitting from a better macro".

With a one-off tax hit in France this year of €25m this would take less than a penny off group EPS.

"Plus ça change," said analyste Neil Wilson at ETX Capital, wondering whether Laury should "finally act to hive off either Screwfix or the French business", but acknowledging that savings from common sourcing targeted at £500m a year by 2021 remains the reason not to go down this route.

With total French sales at constant currency down 3.5%, leaving group total sales on constant currency basis virtually flat, Wilson said, "More urgency to fix the French problem is required."

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