The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
On Tuesday 25 November Kingfisher, the home improvement retailer, is due to post its third-quarter figures. The markets are expecting its sales figures to fall from £3.025 billion down to £2.813 billion. Worse still, is the markets expectation that the following quarter will see sales fall even further, down to £2.57 billion.
Components of the retail sector have spent much of the last month complaining about the mild weather conditions and the way this has negatively impacted sales. A longer summer, and a milder winter, should have benefited home improvement companies such as Kingfisher. It looks like year-on-year profits, however, could be down by as much as 11% and this will be a reflection of the way people from the UK and Europe have fallen out of love with DIY. Arguably, the market had been saturated and the ability to watch a different DIY programme every day of the week highlighted that.
In the plus column, the acquisition of French company Mr Bricolage should help drive profit growth next year, but is too recent to have benefited these figures.
The fact that Home Retail Group is embarking upon a reduction of its Homebase stores by as much as 25% will also help drive footfall in Kingfisher’s B&Q division.
Recent movement in the share price has seen the company briefly break above the 50-day moving average, along with the 100-day moving average coming into range. A break above these could help the share price look to fill the gap back up to 335p.