Mindful Money’s weekly shares watch: Kingfisher, Marks & Spencer & Booker

30th March 2015

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Investors will be keen to hear how Kingfisher’s new boss plans to take the business forward when the B&Q owner publishes its full year results on Tuesday.

Véronique Laury has recently taken over from Sir Ian Cheshire as chief executive and her strategy update is likely to head-up the day’s agenda.

Hargreaves Lansdown equity analyst Keith Bowman notes that some initiatives to reduce product lines and further enhance sourcing could be laid out by Laury. He says: “Falling sales, particularly in France and adverse foreign exchange movements are expected to underwrite an 8% decline in pre-tax profit to £683m on a consensus basis.”

Shares in the firm, which also owns Screwfix, have fallen by 15% over the past 12 months. But the FTSE 100 firm has outperformed since its last update in November with its stock up 8% over the last three months and ahead of the update the analyst opinion currently denotes a ‘hold’.

The Share Centre’s investment research manager Sheridan Admans, who in-line with the general sentiment has the firm down as a ‘hold’, says: “Any further update on Kingfisher’s attempt to take over the French retailer Mr Bricolage, which has been ongoing since last April but appears to have run into difficulty with objections from some shareholders, will also be of interest.”

Thursday sees High Street stalwart Marks & Spencer, deliver its fourth quarter trading update. While its shares are up by 17% over the past year, they endured a fall following the group’s last market update in January, which highlighted a disappointing performance in general merchandise, although food sales remained strong.

Since then however the shares have bounced back strongly and have even outperformed the market. Admans, who has the stock on his ‘buy’ list says: “General merchandise sales will once again be at the forefront of investors’ minds when looking at this update, along with any comments about profit expectations for the full year. Investors will also be keen to hear what level of trading the company is planning for during the remainder of 2015.”

Bowman anticipates that like-for-like sales for both Food and General Merchandise will have picked up from the third quarter. He notes too that recent industry data from market research company Kantar suggest an uptick for same store Food sales to around 0.5%.

He says: “Full year guidance is likely to reassure, supported by ongoing tight cost control, with current consensus underlying or adjusted pre-tax profit expected to increase by just under 3% to £640m. Ahead of the announcement, and with management still focused on improving performance at its General Merchandise division, analyst consensus opinion currently points towards a ‘cautious buy’.”

On the same day, food wholesaler Booker announces a pre-close trading update, which will cover the fourth quarter and comes ahead of its final results in May.

“Investors will be keen to hear about recent sales activity and whether the company remains on track to meet market expectations for profits,” says Admans, who is calling the firm’s stock a ‘buy’, mirroring the market consensus view.

He says: “The performance of the group’s Makro business and operations in India will also be in the spotlight, given expectations that they will be central to driving growth for Booker. Internet sales have also been growing well in recent times and are another priority area for the company so the market will be interested in how they have performed recently.”

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