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LONDON -(Dow Jones)- U.K.-based home improvement retailer Kingfisher PLC (LSE:KGF) ( KGF.LN) posted a decline in underlying first-quarter sales and profit Wednesday as poor weather hit sales of outdoor products across Europe.
The company said that in the 13 weeks to May 3, total sales were GBP2.49 billion, up 8.6% in the same period a year earlier, with retail profit up 8.9%, at GBP96 million. However, stripping out new store openings and closures as well as currency movements sales were down 4.1%, with profit down 2.8%.
"Trading remained very tough, especially in the U.K., and the poor weather was unhelpful for sales of outdoor products," said Chief Executive
Other retailers have suffered from the U.K.'s recent cold, wet weather. Rivals such as (TSCDY) and Home Retail Group PLC (LSE:HOME) (HOME.LN) have responded by cutting prices for some outdoor furniture and garden products.
CEO Cheshire said Kingfisher has reworked its 2008 budgets to reduce its reliance on sales growth in what could be a challenging year.
While Kingfisher's first-quarter profit figure was ahead of expectations, Credit Suisse said that was due to a margin gain at the U.K. unit, which will reverse over the rest of the year. Sales were weak in the U.K. but gross margin was up nearly 300 basis points reflecting lower mark downs and timing benefits.
Credit Suisse said it expects the company to miss current full-year forecasts in all divisions except Poland and Castorama France - underlining the need for the company's more defensive mix of gross margin and cost containment.
The company slashed its full-year dividend and capital expenditure plans in March after the U.K. consumer spending squeeze hit earnings.
Kingfisher shares closed Tuesday at 139 pence. The shares have fallen about 40% in the last 12 months on concerns about a slowdown in sales and profit growth as consumers cut back spending.
Wet weather and a consumer spending slowdown have produced a tough few months for many U.K. retailers. The long Easter weekend is a key trading period for home improvement retailers but relies to some extent on favorable weather conditions.
Kingfisher is Europe's biggest home improvement retailer by sales with around 780 stores in nine countries across Europe and Asia.
CEO Cheshire said in March that Kingfisher's priorities were to improve cash margin and control costs.
The company has already announced plans to invest GBP33 million on restructuring its operations in China.
Company Web site: http://www.kingfisher.com
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(END) Dow Jones Newswires 06-04-08 0314 Copyright (c) 2008 Dow Jones & Company, Inc.
