Home improvement retailer Kingfisher’s share price slumped on Wednesday as it cut its profits guidance again.
At 216.3p per share, Kingfisher was down 6.2% in midweek business and leading the FTSE 100 lower.
During the three months to October, sales at the B&Q owner dropped 2.1% to £3.2 billion, or 2.7% at constant currencies. On a like-for-like basis sales were down 3.9% year on year.
Weak conditions in France mean that Kingfisher now expects to record adjusted pre-tax profit of £560 million in the current financial year (to January 2024). That’s down from a prior forecast of £590 million.
Comparable profits came in at £758 million during financial 2023. Wednesday’s guidance cut is the second in as many months for the beleagured retailer.
The business also cut its free cash flow estimates, to £470 million from £500 million previously.
French Woes Offset UK And Irish Strength
Revenues at Kingfisher’s core UK and Ireland unit rose 3.3% between August and October, to £1.6 billion. On a like-for-like basis sales were up a more modest 1.1.%.
The firm said that consumer demand remained resilient in its home market. It added that both its B&Q and Screwfix banners “grew faster than their respective markets… with particularly strong market share gains seen at Screwfix.”
But in France, sales tumbled 8.7% year on year to £1 billion, or 8.6% on a like-for-like basis. The company said that trading has been “impacted by a weak market backdrop affecting both consumers and trade.”
Kingfisher said that sales slowed slightly at the start of quarter three from the July quarter but then “deteriorated far more than expected in September.” The company operates the Brico Dépôt and Castomarama banners in France.
The firm noted that “though the market and trading trends have improved in October (and in quarter four/November to date) compared to September, we have assumed that the French market will remain at least as weak as October throughout quarter four.”
Sales in its other international markets dropped to £608 million during quarter three. This was down 3.7% year on year or 7.6% on a like-for-like basis.
Turnover in Poland reversed 2.9%, or 9% on a like-for-like basis, to £438 million. However, the FTSE 100 firm said that sales were improved from the first half “as consumer confidence, while still negative, continued to recover.”
Downward Trend Continues
Kingfisher said that fourth-quarter trading “has started largely in line with the trends” of the previous three months, “including continued resilience in the UK and market weakness in France.”
It said that like-for-like sales were down 3.4% during the three weeks to 18 November.
Chief executive Thierry Garnier said that “our UK banners performed well in [quarter three], with B&Q, TradePoint and Screwfix growing sales and market share.”
He added that “our performance [in France] was impacted by a weak retail market, as well as a delayed start to insulation, plumbing and heating sales – to which Brico Dépôt is more heavily weighted – due to unusually warm autumn weather, and strong prior year comparatives in these categories.”
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