Kingfisher reverses early losses as full-year profits fall, soggy guidance issued

Kingfisher shares staged a sharp turnaround on Monday after the DIY retailer said profits would be lower in the coming year as 2023/24FY sales and profits fell.

Having started the session deep in the red, Kingfisher shares were trading 2.4% higher at the time of writing.

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The UK showed resilience but European performance was particularly poor. French retail profit sank 28.% while the UK’s retail profit dropped 8%.

“Kingfisher has published a concerning set of results this morning. The multinational DIY retailer has issued what is now a third profit warning in the last six months, with consumers shelving plans for DIY home improvements, chipping away at Kingfishers’ bottom line. French and Polish regions of the business were noticeable underperformers in what continues to be a challenging period for the retail sector,” said Mark Crouch, analyst at investment platform eToro.

When homeowners have little confidence improvements to their property will translate to great value, they hold back on DIY projects. This dynamic has hurt Kingfisher’s profitability.

Group like-for-like sales were down 3.1% and reported operating profits fell 20%. Adjusted profit before tax was £567m, slightly higher than the guidance of £560m which was revised lower in its Q3 trading update.

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The company said it expected profit before tax would be c.£490m to £550m in 2024/25.

“B&Q owner Kingfisher is still very much in repair mode, with its performance damaged by cost-of-living headwinds and a struggling housing market. It’s issued the third warning in six months about the outlook for profits, as they fell 25% for the full year,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“There had been hopes that with interest rates eyed on the horizon, and UK house prices stabilising, that demand for DIY products and services would bounce back, but the company says due to the lag between house sales and renovation projects being green lit, recovery is further on the horizon.”

It wasn’t all doom and gloom; Kingfisher has expanded the Screwfix brand through an online-only model into six new countries: Poland, Spain, Belgium, the Netherlands, Sweden and Austria, utilising a fulfilment centre in France. Kingfisher sees this as a model that can be replicated to enter new European markets.

“The bright spot appears to be online sales, with the revamped marketplace platform, also offering third party products, helping boost e-commerce sales in the UK and Iberia beyond expectations. However, in France, subdued consumer confidence and a weak housing market continues to be a drag and it’s now trimming back floor space for the Castorama chain while restructuring and modernising the store network to compete with rivals like Leroy Merlin,’’ Streeter said.

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