Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors
Markets

PREVIEW - Kingfisher to cast light on DIY retail sector

A look at some of the company'e reporting in the week beginning May 23
Pictured is a B&Q retail store in the UK
B&Q owner Kingfisher reports this week

A first quarter update from B&Q owner Kingfisher PLC (LON:KGF) is likely to be keenly analysed by investors as it will throw further light on the currently under pressure UK retail sector.

The update covers the long Easter weekend - not surprising a  key trading period for DIY retailers. The group also owns rapidly expanding Screwfix.

The update is also likely to provide insight into the actions of UK householders in terms of upgrading homes and gardens, and the state of the building sector more generally.

Kingfisher should have benefitted from early Easter

Broker Numis says the group, which is trying to turn itself round, should have benefited from the early Easter but the broker expects that colder temperatures in Northern Europe to have delayed the onset of what it calls the important 'gardening season'.

"In the past, this has often reversed out in Q2. The UK business will remain underpinned by the exceptional growth of Screwfix (now more than 20% of divisional sales) and LFL at B&Q should gain from its own and Homebase’s store closure programmes," said analyst Matthew Taylor, who rates the share 'reduce', targeting 325p.

As reported earlier this year, retail profit for the year to end January was up 7.4% to £746mln largely due to a good performance from Screwfix and a stable overall performance in France. But statutory profit for the  year was £512mln, over 20% down from £644mln  in 2014.

The Share Centre said: "The group beat market expectations with its full year results, but the weak performance of the French operations remain a drag and investors will be keen to hear how that part of the group is performing." It rates KGF a 'hold'.

Another high profile retailer reporting next week is High Street bellwether Marks & Spencer (LON:MKS), with results out on Wednesday.

The trading update in April was fairly gloomy but not as bad as had been expected, with underlying sales for the 13 weeks to March 26 falling by 2.7% in core clothing and home division.

That reverse was better than the 3.4% being predicted by the market and the 5.8% drop recorded in the third quarter.

New chief, Steve Rowe said at the time the performance was mixed, with the food business once again outperforming the market by around 3.5% pts.  

"Although the sales decline in Clothing and Home was lower than last quarter, our performance remains unsatisfactory and there is still more we need to do," he said.

Laith Khalaf at Hargreaves Lansdown noted: "Marks and Spencer now takes £1 out of every £25 spent on food in the UK, putting it in the same basket as players like Aldi, Lidl and Waitrose.

"This is testament to how well their food business has grown, with 80 new stores opened over the last year."

Khalaf also notes the strong growth in online sales was encouraging, but that "this bright light does serve to highlight quite how gloomy things are on the shop floor".

Numis remains neutral on Marks & Spencer

Meanwhile, Numis rates Marks a 'hold'.

"... although we continue to see the visible benefits that the bought-in gross margin gains and reduced capex profile should provide to earnings and cash flow respectively, we remain unconvinced that the trading trend in the GM division can be easily reversed and remain neutral," it said.

Also in big cap world Dixons Carphone Group (LON:DC.) reports. The merged entity had a record Black Friday, as reported in January, which helped the electrical retailer to predict annual profits ahead of hopes.

The company said a strong performance during the price-cutting event in late November and buoyant discounted sales after Christmas boosted group like-for-like revenue in the 10 weeks to January 9 by 5%.

It expected group headline pre-tax profit in the full year to be between £440mln and £450mln, slightly ahead of consensus

Numis says: "We expect further solid progress during Q4, with consensus forecasts indicating LFL of +2% in the UK, +4% for the Nordics and a flat result in S Europe giving +2% at group level, on track for FY forecasts.

The shares have outperformed the sector by 5% over the past 12 months, it highlighted.

In small cap world virtual queuing firm Accesso Technology Group (LON:ACSO) holds its AGM on Tuesday.

Accesso AGM statements "qualitative rather than quantitative"

"Historically accesso's AGM statements have been qualitative rather than quantitative and include an update on trading in non-numerical terms.

"Given newsflow from US Theme Park players such as Six Flags, we expect management to indicate a strong start to the year, although the peak summer season is still ahead of us and thus it is hard to draw too much from the first quarter. We think the key theme remains the rollout of the Merlin contract which drives growth and earnings for the next three years."

Also with AGMs next week is Alliance Pharma plc (LON:APH) and e-Therapeutics PLC (LON:ETX).

This month drug discovery group e-Therapeutics unveiled a deal to acquire an internet search engine for up to £2.32mln. Searchbolt, the business being bought, was spun-off from ETX when the latter was listed on stock market in 2007

Searchbolt’s main asset is an exclusive licence to use the technology ETX deploys in network pharmacology used to identify drug candidates.

On Monday, regenerative medical technology specialist Tissue Regenix Group PLC (LON:TRX) reports full year results and traders will be keen to hear more on recent progress.

In March, US house Jefferies said it was making clear progress on all fronts, and rated the shares a 'buy'.

The group is a wound care expert, with its Dermapure product being used to rebuild cells in the most difficult of wounds.

The broker noted that product (Dermapure ) has now surpassed the $1mln revenue mark and with nine of 11 medicare administrators secured (and promising private payor progress) analyst Chris Cooper expected further acceleration through full year 16/17, particularly now the "hybrid sales model is well established and senior sales directors are in place"

Significantly the firm was recently granted US regulatory clearance for SurgiPure XD, a skin graft for hernias derived from pig tissue, signalling a commercial launch in the US later this year, so investors will be looking at any news on this.

"We estimate FY17 Dermapure/ Surgipure sales of $9m/$0.6m, with $2.9m from Orthopure by FY18. We continue to view orthopedics as the greater LT value driver and are encouraged by progress to date," said Jefferies in March.

 

Significant announcements expected:

Monday May 23

Full year - Ryanair Holdings PLC (LON:RYA), Tissue Regenix Group PLC (LON:TRX).

Tuesday, May 24

Full year - Severn Trent PLC (LON:SVT), Cranswick plc (LON:CWK), Aveva Group (LON:AV.), Homeserve PLC (LON:HSV).

Trading statement - Kingfisher PLC (LON:KGF)

Wednesday, May 24

Full year - Marks & Spencer Group (LON:MKS), Great Portland Estates (LON:GPOR), Pennon Group (LON:PNN),

Trading statement - Dixons Carphone (LON:DC.), Intertek Group

Thursday, May 25

Full year - QinetiQ Group (LON:QQ.), Tate & Lyle (LON:TATE), Pets at Home Group (LON:PETS),

Half/ quarterly - Daily Mail & General Trust PLC (LON:DMGT),

Friday, May 26

Trading statement - Bodycote (LON:BOY).

Giles_55af4ddca6481.jpg

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2017

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use