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Kingfisher continues to see sales growth despite new lockdowns

Last updated: 19:50 19 Nov 2020 AEDT, First published: 18:35 19 Nov 2020 AEDT

Kingfisher PLC - Kingfishercontinues to see sales growth despite new lockdowns

Kingfisher PLC (LON:KGF) has seen its sales grow despite the new coronavirus (COVID-19) lockdowns across Europe, supported by its focus on home DIY.

In a third-quarter trading update, the FTSE 100-listed retailer said demand is mostly focused on the paint, decorating materials, outdoor, building materials and kitchen ranges and in-store availability is currently below last year, amid capacity constraints and extended lead-times from its raw material suppliers.

READ: Kingfisher sells Castorama Russia for £73mln

The B&Q shop chain said it expects these challenges to continue for at least the next six months as the pandemic continues to impact supply chains.

Kingfisher noted that sales for the two weeks to November 14, 2020, were up 13%, albeit down from 17% growth over the three months to October 31.

Sales in the first week of November were driven by exceptional demand in the UK, particularly at B&Q, ahead of the latest lockdown in England which started on November 5, while over the two weeks since there was low footfall across all geographies due to the restrictions.

All the retailer’s 1,370 stores are currently open for in-store purchasing and click & collect, it noted.

Kingfisher did not provide revenue or profit guidance for its financial year ending on January 30, 2021, due to the uncertainty, however it anticipated that adjusted profit before tax will include £175mln of temporary cost savings net of any one-off COVID-19 related costs, which are forecast to be £45mln.

In the UK, the company noted that business rates relief is estimated to be £110mln, while the £23mln it received from the government under the furlough scheme has been repaid.

Gross capital expenditure is expected to be £280mlnnd, as of November 17, 2020, the group had access to over £3.5bn in total liquidity, including cash and cash equivalents of £2.2bn and eligibility for £1.3bn worth of facilities.

"There is a strong potential for pent-up demand in consumers choosing to travel again, rather than funnel time and monies towards home improvements," said Richard Hunter, Head of Markets at interactive investor.

"At the same time, while the home working environment could be here to stay in a limited capacity, there will be some form of a return to the office which will again impact future prospects for the likes of Kingfisher."

"The strong performance has led to the question of whether the shares are now up with events, as evidenced by some initial profit-taking in early trade, such that the market consensus of the shares remains at a hold.”

Shares lost 4% to 287.4p on Thursday morning.

--Adds analyst comment, shares--

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