THE price-war in the High Street claimed its latest victim yesterday,
with Kingfisher announcing disappointing trading results and lower
margins for the 24 weeks to January 14.
Like-for-like sales were up 4.4% at the DIY chain B & Q, 3.9% at
Superdrug and 3.3% at Woolworths, but sales at its French electrical
retailing subsidiary Darty were 7.1% lower and Comet's sales were down
3.3%.
Woolworths was seen as the major upset, with its Christmas trading not
as buoyant as analysts had hoped. In addition, Comet was adversely
affected by the slump in demand for computer games, a situation which
also depressed trading at the rival Dixons group.
Kingfisher said that its markets continue to experience patchy trading
conditions. However, Chairman Sir Geoffrey Mulcahy said evidence
suggested that the group had maintained or increased its market share in
most of its core markets since the half year.
According to David Stoddart, retail analyst at SGST, ''the key thing
about Kingfisher is that it does not have a growth business in the
group''. He added ''It's got a bunch of mature formats which we would
argue are very much 1980s businesses, not necessarily 1990s
businesses.''
Kingfisher believes that by concentrating on its value strategy of
delivering everyday low prices, improved merchandise ranges and even
better service, it will win customer loyalty and increased sales.
With the French economy showing little signs of recovery and consumer
confidence in the UK likley to dip in the months ahead as tax increases
take effect, there is little prospect of an improved trading
performance.
City analysts were quick to downgrade their Kingfisher profit
forecasts for both the current year and 1994/95. Predictions for this
year's taxable profits were scaled back by #20m to around #300m. Next
year's profit forecasts centre around #350m before tax.
With the market already worrying about the strength of the UK economic
recovery, Kingfisher's news was received badly and the shares sank 37p
to 678p.
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