Kingfisher PLC (LON:KGF) shares rose on Wednesday after the B&Q owner said it now expects its adjusted pre-tax profits for the first half to be ahead of the prior year following strong sales growth in its second quarter.
The owner of B&Q reported that like-for-like (LFL) sales in its second quarter to July 18, 2020, were up 21.6%, reflecting what it said was “strong e-commerce growth” and the reopening of its DIY stores in the UK and France from mid-April. However, the company’s LFL sales in the year to July 18 were still down 3.7%.
READ: Kingfisher sees annual profits hammered but sales spring back after coronavirus lockdown easing
E-commerce saw particularly strong growth figures, with LFL sales in the channel rising 225.2% in June and 183.3% over the three weeks to July 18.
Looking ahead, Kingfisher said it was entering its second half “with a favourable trading backdrop”, however, its visibility remained low given the uncertainty surrounding the coronavirus pandemic and it did not provide specific guidance.
“The operational and financial actions we have taken, together with the strong demand for home improvement we are currently seeing, give us a sound footing in the current crisis and beyond”, the company said.
Kingfisher shares surged 10.5% higher to 248.80p in morning trading.
Lockdown has shifted consumers’ focus
AJ Bell investment director Russ Mould commented: “It’s been a long time since DIY shops group Kingfisher delivered some good news. Unsurprisingly trading has been very strong in the second quarter as households spend lockdown doing up their homes. This is the tailwind Kingfisher has desperately needed to get back on its feet after such a long period of struggling.
“Anyone stuck at home will have been staring at their four walls and perhaps wondering why they’ve lived with peeling paint, grubby skirting boards and rotting garden sheds for so long. Lockdown has shifted consumers’ focus from leisure experiences and commuting to improving the home environment."
He added: “Shops like Kingfisher’s B&Q have been natural choice for households to go and pick up bits and bobs to make their home look smarter. The large-sized stores in Kingfisher’s estate will have also made it easier to adhere to social distancing measures, so really DIY companies have been a role model for how retail can work in the new world.
“The big question for Kingfisher is can it sustain the sales growth momentum? As more people return to work and lockdown measures start to ease, consumers’ focus could easily shift away from the home and back to the lifestyle they once enjoyed.
“Kingfisher has been trying to fix its business for years with limited success and so management really need to stay focused on their own repair job than celebrating short-term gains.”
-- Updates share price, adds analyst comment --