DIY specialist Kingfisher (LSE: KGF) has seen its share price slip to its cheapest since early August on Tuesday, with the stock shedding 4% of its value following its latest financial release.

Investors continue to be perturbed by the difficulties Kingfisher is suffering in France, a region responsible for 40% of retail profits. Like-for-like sales at its Castorama and Brico Dépôt fascias slumped 3.8% and 3.3% respectively during August-September.

In better news, however, sales at the company’s British operations were far more robust during quarter three. Underlying revenues at B&Q rose 3.5% during the quarter, while till activity at its Screwfix stores roared 12.7% higher.

Sparky sales

Electricals retailer AO World (LSE: AO) also painted a cheery picture concerning the state of the British retail sector.

The business advised on Tuesday that total UK revenues surged 18.7% between April and September, to £295.1m. And, unlike Kingfisher, AO World is also enjoying splendid revenues growth at its key European operations — sales on the continent charged 66.9% higher in the first half, to €36.2m.

However, AO World sounded some caution looking ahead, the firm warning that “the economy clearly faces some uncertainty and the sterling softening during the year is likely to provide some pricing pressure.”

Demand for big-ticket items like televisions and dishwashers is likely to come under severe pressure in the months ahead as Britain’s attempt to exit the EU continues. Rising inflation is likely to heap pressure on shoppers’ spending power, while a possible rise in unemployment and fall in wage growth could put a further dent in AO World’s revenues further down the line.

Risky business

Of course these pressures are likely to hit Kingfisher, too, a worrying scenario as its UK markets are critical in keeping group sales afloat. Group like-for-like sales edged just 1.8% higher in the last quarter.

Broadly speaking, retail data since June’s EU referendum has been much better than expected, crowned off by latest ONS data this week that showed October sales rise 7.4%. This is the fastest rate of growth for 14 years.

But it is a hard ask to expect this strong uptrend to continue, in my opinion, particularly for sellers of expensive items like AO World.

On the shelf

The City already expects AO World to remain loss-making during the current year ending March 2017. And I believe the firm’s bottom line could keep on disappointing as suppliers follow the example of Apple and hike prices to compensate for pound weakness, putting AO World’s already-thin margins under enormous pressure.

The near-term forecasts at Kingfisher is a little sunnier, the number-crunchers predicting a 7% earnings rise in the 12 months to January 2017. But while this results in a P/E rating of 15.2 times — just above the FTSE 100 average — I reckon this is far too heady given the firm’s tough trading outlook at home and abroad.

I believe investors should leave both retailers on the shelf right now.

The post Are these retail results a good omen for the UK high street? appeared first on The Twelfth Magpie.

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The company saw like-for-like sales rise 3.3% during February-July, to £5.75bn, it advised today, a result that drove underlying pre-tax profit 13.5% higher to £436m.

Spectacular sales growth at its Screwfix fascias gave particular reason for cheer, with total sales here leaping 14.4% on a like-for-like basis during the first half. This pushed total underlying sales from the UK and Ireland 6.7% higher, to £2.61bn, with like-for-like takings at Kingfisher’s flagship B&Q brand also rising 4.6% in the period.

There was a fly in the ointment however, with underlying sales in Kingfisher’s other key marketplace of France dipping 1.6% during February-July because of wet weather and industrial action in the second quarter.

Still, the screw and shed specialist’s ability to dodge the worst of the Brexit fallout has rightly dominated the headlines, as has the success of Kingfisher’s ongoing transformation strategy. The business has now shuttered 52 of the 65 B&Q stores scheduled for closure, and costs related to its five-year restructuring plan are expected to come in lower than expected for fiscal 2017.

While today’s update is certainly encouraging, I believe investors should remain cautious on Kingfisher’s revenues outlook in the months and years ahead as retail industry data remains patchy at best.

So while the firm’s forward P/E rating of 16.2 times may be reasonable on paper, I believe Kingfisher isn’t yet out of the woods and won’t be taking the plunge myself just yet.

French toast?

Fashion play French Connection (LSE: FCCN) hasn’t fared so well in Tuesday’s session however, a disappointing trading update providing fresh fuel for existing investor jitters. The stock was last down 6% on the day.

French Connection advised that more store closures pushed retail revenues 8.7% lower between February and July, to £69.2m. This kept French Connection firmly in the red with pre-tax losses of £7.9m, matching the result of the corresponding 2015 period and a result that chairman and CEO Stephen Marks described as “disappointing.”

The clothing seller’s turnaround strategy is still failing to make a tangible difference to the bottom line. And marketplace problems across the retail sector look set to keep French Connection under pressure — the firm noted “tough trading conditions on the UK High Street” during the first half, and that “we have continued to see this trend in retail in the early part of the second half of the year.”

City analysts aren’t expecting French Connection to bounce back into the black any time soon, given the huge amount of work the firm still has to achieve and intense competitive pressures. I believe investors should continue to steer well clear at the present time.

The post Are these 2 retail giants knockout buys after today’s updates? appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

DIY darling?

Retail giant Kingfisher (LSE: KGF) greeted the market with promising trading numbers on Tuesday, the business enjoying a “solid start to the year” and cheering the results of its five-year restructuring scheme.

The DIY specialist saw like-for-like sales rise 3.6% during February-April, it advised, driven by the tearaway success of its Screwfix tradesmen outlets — underlying sales here galloped 16.2% higher in the quarter.

Kingfisher still has a lot of work in front of it as B&Q store closures continue, while previous challenges in its critical French market could also resurface.

But with an anticipated 3% earnings rise for the year to January 2017 creating a decent P/E rating of 15.9 times, many investors will be tempted in by Kingfisher’s improving momentum at current share prices.

Food favourite

Food manufacturer Cranswick (LSE: CWK) also pleased investors with perky financials on Tuesday, the business reporting an 11% pre-tax profit surge in the year to March 2016, to £58.7m.

This was underpinned by a 6.6% revenues rise in the period, Cranswick noted, to £1.07bn, with volumes increasing 12%. The business reported solid growth across all eight of its major divisions, bar Cooked Meats.

Cranswick is clearly benefitting from a steady stream of product rollouts across its product catalogue, and shrewd acquisitions like that of poultry specialist Benson Park should keep sales heading higher.

The City expects Cranswick to record an 11% bottom-line upswing in fiscal 2017, resulting in a heady P/E rating of 19.8 times. Still, I reckon the firm’s terrific earnings record and solid growth outlook merits such a premium.

Car star

Breakdown specialist AA (LSE: AA) also made the news on Tuesday after confirming that it’s “exploring options in regards to its Irish business.”

The statement follows a report from The Sunday Times that Carlyle Cardinal was poised to launch a €160m bid for AA’s assets there. The sale could prove a canny one as AA’s revenues from Ireland continue to disappoint — they fell 3%, to £38m, in the period to January 2016.

Regardless, I believe the fruits of restructuring elsewhere, and particularly improvements to its digital presence, make AA a great pick for long-term investors. And a 4% earnings rise for fiscal 2017 leaves the business dealing on a tasty P/E rating of just 11.6 times.

Bright spark

Emergency plumbing and electricity services play Homeserve (LSE: HSV) also furnished the market with strong financials on Tuesday, the company reporting an 8% pre-tax profit boost — to £82.6m — in the 12 months to March 2016.

As well as enjoying strong demand in the UK, Homeserve’s expansion scheme in the US is paying off handsomely, the company adding an extra 700,000 clients across the Pond. As a result, group revenues rose 8% in the period to £633.2m.

With the City expecting takings in North America to keep surging, Homeserve is predicted to deliver a 6% earnings rise in the current year, producing a P/E rating of 17.6 times. I believe this is great value given the firm’s terrific potential in the US and Europe.

The post Should you buy Kingfisher plc, Cranswick plc, AA plc and Homeserve plc following today’s news? appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Homeserve. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.