Investment: Kingfisher shows the way for retail sector

IN AN increasingly difficult consumer environment, Kingfisher has proved to be one of the retail sector's more resilient performers. Its shares - which jumped 20p to 540p on good half-year figures yesterday - are only 7 per cent off their March peak as investors have turned to the relative safety of the FTSE 100 retailers.

Kingfisher's interim figures certainly showed scant evidence of an economic slowdown. Pre-exceptional interim profits were 22 per cent higher at pounds 182.6m, driven by a terrific performance from B&Q, where profits rose by 19 per cent. Woolworths is experimenting with an out-of-town format that gives more space to toys, children's clothing and homewares and it will print a million of its Woolworths Direct catalogue for Christmas.

Superdrug is moving more into health and beauty and is testing a store that offers massages and a hair salon. Meanwhile, Comet is plodding along after last year's windfall-fuelled surge.

With the home front looking secure and the on-off Asda deal probably dead, Kingfisher was making much of its pan-European ambitions yesterday. Darty, the French electricals business, is doing well and the stake in the BUT electricals and furniture operations is now up to over 60 per cent. Kingfisher's European division also has interests in Germany, Holland Belgium and Poland, and it would be no surprise if more territories were soon invaded.

Sir Geoff Mulcahy, Kingfisher's chief executive, would not be drawn on his plans for Castorama, the French DIY business with which Kingfisher was linked last month. But with talk of a wider European stage, he did seem to be preparing the market for a deal on the Continent.

On Merrill Lynch's full-year forecast of pounds 580m the shares trade on a prospective multiple of nearly 18. Not cheap but decent value for a well- managed business in a difficult sector.