DIY sales forecast to fall again
Published:  26 July, 2011

LONDON: The slump in retail sales will come into sharp focus again this week with a trading update from B&Q owner, Kingfisher.

Earlier this year, the 330-store UK and Ireland store group said sales grew by 1.5% to 1.1bn in the three months to 30 April, but the City is less optimistic about its figures, which reveal second quarter trading conditions. Brokers have pencilled in a fall of as much 5% on a like-for-like basis.

Chief executive Ian Cheshire earlier said he expected the rest of this year to be tough, particularly in the UK. The warm weather experienced during the spring may have brought forward many sales of outdoor equipment that may otherwise have boosted the summer months, he said.

Retail analysts at Deutsche Bank also believe that the impact of Focus DIY's closing down sale may have hit B&Q during the second quarter as it tempted customers away. They believe this factor could account for as much as 3% of any decline.

While they argue in the longer-term, the overall reduction in DIY shed space should be good news for B&Q, even if UK housing transactions do not recover, they have cut their 2011-12 profit forecast for B&Q by 18m.

The decision by many big retailers to start their summer sales early is expected to lift the figures for June but analysts do not expect any increase to be enough to make up for the 1.4% decline in May. Analysts warn that although the early summer sales are likely to boost June's figures, they could damage July's numbers.

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