Consumer

Andrea Felsted is a Bloomberg Gadfly columnist covering the consumer and retail industries. She previously worked at the Financial Times.

Like anyone faced with a home-improvement mishap, Kingfisher Plc has plenty of excuses for what went wrong. Peel back the wallpaper, though, and there's bigger warning for the wider high street.

Barbecue Blues
Kingfisher's U.K. same store sales went backwards in the second quarter

On Thursday, the owner of B&Q do-it-yourself stores became the latest British retailer to disappoint investors. Like-for-like sales from the U.K. and Ireland fell 1 percent in the three months through July, well short of analyst expectations of a 1.5 percent increase.

Fixer-Upper
Kingfisher shares have trailed the wider FTSE 100 Index over the past 12 months
Source: Bloomberg

Blame the decline, Kingfisher says, on a weak performance in seasonal products -- down 11 percent year on year. Warm weather earlier in the spring and early summer prompted Britons to make their purchases of bedding plants and barbecues in the preceding three months. The annual comparison is also tough: in the year-earlier period, sales had climbed by a punchy 7.2 percent.

As usual, Screwfix, which serves the building trade, was the star performer. There, like-for-like sales were up 10.8 percent, compared with the 4.7 percent decline at B&Q.

Kingfisher is no stranger to air bubbles in the wallpaper. It blames the inclement weather, unfavorable exchange rate or the passing disruption from overhauling ranges and suppliers as CEO Veronique Laury spruces up the retailer.

Analysts at RBC suggest -- rightly -- other factors are at play: among them, slower housing activity and weakening U.K. demand for big-ticket items like kitchens and bathrooms.

Kingfisher isn't alone in feeling the pinch in areas where consumers have to dig deep. DFS Furniture Plc said last week that underlying earnings would be at the low end of its already reduced guidance. Clothing and home furnishings retailer Laura Ashley Holdings Plc warned on profits on Tuesday.

Household Goods Sales Have Consistently Lagged
Annual percentage change in retail sales by volume
Source: Office for National Statistics via Bloomberg

The darkening outlook for retailers specializing in big-ticket items is underlined by official sales figures on Thursday. They show growth in sales of household goods has lagged the wider non-food index in 12 of the past 14 months.

After an 18 percent fall in the share price over the past year, Kingfisher trades on a forward price earnings ratio of 12.1, slightly less than its European peer group. Given the storm clouds gathering over the high street and Kingfisher's habit of getting blown off course, that caution looks justified.

--With assistance from Mark Gilbert.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Andrea Felsted in London at afelsted@bloomberg.net

To contact the editor responsible for this story:
Edward Evans at eevans3@bloomberg.net