Kingfisher shares jumped on Tuesday after the DIY specialist announced half-year results that weren’t as bad as expected.
Investors are becoming accustomed to Kingfisher’s poor updates, and any hint of positivity can have a material impact.
That positivity came in the form of half-year results that beat expectations on Tuesday, although revenue still fell over the period. Sales were down 1.8% to £6.75bn.
Consumers still concerned about high interest rates and feeling the effects of inflation are holding off on big-ticket purchases, which is affecting B&Q owner’s sales.
”Kingfisher has posted a somewhat flat set of results,” said Adam Vettese, market analyst at investment platform eToro.
“Whilst the top line numbers are slightly off, it does represent an improvement on their update earlier in the year which did flag some cause for concern that conditions were becoming quite tough.
“Tighter household budgets and higher interest rates have meant consumers have tended to repair and renovate as opposed to moving to a shiny new house. This in turn however has seen ‘big-ticket’ sales drag on the numbers for the same reason. Whilst the company seems to have stopped the rot and the market is now better than initially feared, it’s safe to say the B&Q and Screwfix parent company is no longer enjoying the pandemic DIY boom of a few years ago.”
However, investors are looking past revenue figures to the profit upgrade for the full year. Despite the group posting falling revenues for the recent six-month period, Kingfisher increased their profit guidance for the full year.
“The company is now expecting adjusted pretax profit to come in between £510 and £550 million, instead of in a range of £490 to £550 million. Investors had already expected a difficult reading for the first half, so the fall in profits by 0.5% didn’t knock sentiment further,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
The higher profit guidance is the result of the action on costs in recent periods starting to filter down to the bottom line. Its not lost on investors that if the action on costs is accompanied by growth of the top line, Kingfisher are set for stronger profit going into the future.
Kingfisher shares were over 6% higher at the time of writing.