Thursday, 16th August: The market continued to be unforgiving on Thursday morning after Kingfisher released their second quarter update. Sales rose by 1.6 per cent in the three-month period, which is quite the improvement when compared to the 4.0 per cent decline in the first quarter. However, the market instead focused on the lower margins and the struggles they continue to face with the French business Castorama, where sales were down 3.8 per cent on an underlying basis. The hot weather played a large role in B&Q sales, who sold out of paddling pools, experienced a 400 per cent increase in the sale of hosepipes and sprinklers, 75 per cent increase in charcoal for barbecues and sold 305,000 fans. Regardless of this, Kingfisher shares were down more than 4.0 per cent on the FTSE 100 in the later hours of trading, keeping them at the bottom end of the index.
New retail data on Thursday demonstrated how consumer were still opening their wallets more willingly having been encouraged to do so by the World Cup and the weather. Retail sales were up 3.5 per cent in comparison to the previous year, and 0.7 per cent in comparison to the previous month, both ahead of forecasts. When excluding fuel sales, which were weakened due to rising oil costs, sales growth across a three-month period was at its highest since March 2004.
Amongst the grocers, Asda also reported a second quarter update, which revealed a 2.6 per cent increase in underlying sales during the three-month period, which was impressive in comparison to the 1.0 per cent increase in the first quarter. Asda and Sainsbury’s are still waiting approval from the competition agencies on whether they will accept Sainsbury’s £7.3 billion takeover of Asda, which would consequently overtake Tesco as Britain’s largest supermarket group.
The FTSE 100 managed to prevent a fourth day of losses and ended the day 0.78% higher at 7556.