Kingfisher shares are the latest casualty of the pessimism created by Rachel Reeves’ budget and its impact on consumer spending and business investment plans.
DIY specialist Kingfisher named the UK and French budgets as specific reasons for slow trading in Q3, which saw like-for-like sales fall by 1.1%.
As a result, Kingfisher has reduced its profit before tax outlook to a range of £510m to £540m from £510m to £550m. The adjustment is small but the mere fact Kingfisher has lowered its outlook has rocked shares sending them lower by 13%.
“After what was a strong first half of the year for Kingfisher, the DIY retailer’s latest trading update looks much more shaky, as the impact of Rachel Reeves’ recent budget may have dealt a significant hammer blow for the B&Q owner,” said Mark Crouch, market analyst at investment platform eToro.
“The rise in National Insurance costs has put pressure on Kingfisher’s profit outlook, shaving off the upper end of its projected earnings, and as consumers and businesses adjust to the latest Labour budget measures, this financial strain is becoming increasingly apparent.”
Although the share price reaction portrays doom and gloom for the retail, there were some signs of positivity. The UK business showed signs of strength with B&Q’s e-commerce platform growing 45% and Screwfix and Tradepoint increasing market share.
“Despite these challenges, Screwfix held up relatively well helping to offset some of the broader difficulties, posting modest sales growth. However, Kingfisher’s performance in France remains a concern, with sales continuing to fall. What first might have felt like a splinter at the start of the year for Kingfisher could develop into something worse if the current trends there don’t reverse,” Crouch explained.