Kingfisher shares take hit after profits downgrade

Kingfisher, the owner of B&Q, downgraded its full-year guidance and said it anticipated a £31 million hit from higher employers’ national insurance contributions (NICs), prompting a 13 per cent fall in its shares.
The DIY retailer narrowed its annual pre-tax profit expectations to between £510 and £540 million after worse than expected quarterly sales and warned of an “uncertain” outlook. Kingfisher had previously expected profits of between £510 and £550 million, below the £568 million in the 12 months to January 31.
The group, which also owns Screwfix in the UK and Castorama and Brico Dépôt in France, said the increase in employers’ NICs announced in last month’s budget would cost an additional £31 million. Changes to tax laws announced in France are also due to give the group a headwind of £14 million.
Retailers have warned that the rise in employers’ NICs from 13.8 per cent to 15 per cent in April 2025 will result in price increases and a slowdown in hiring. Kingfisher employs about 34,000 staff in Screwfix and B&Q stores across the UK.Thierry Garnier, the Kingfisher chief executive who has been seeking to turn around the group since 2019, said improved trading in August and September “was offset by the impact of increased consumer uncertainty in the UK and France in October, related to government budgets in both countries”.The FTSE 100 company reported a slowdown in trading in the three months to October 31 as like-for-like sales declined 1.1 per cent, compared with analyst forecasts of a 0.2 per cent decline.Kingfisher posted sales of £3.22 billion in the quarter, missing consensus forecasts of £3.27 billion. Sales of big-ticket items “remained soft”.In the UK and Ireland, the group reported sales of £1.62 billion in the quarter, a 0.4 per cent increase compared with the same period last year. The retailer said that it would offset the impact of the increase in the UK’s minimum wage announced in last month’s budget through “structural cost reductions and productivity gains”.Weak sales in France weighed on the group as like-for-like sales in the country declined 4.3 per cent during the three months to October 31, compared with consensus forecasts of a 2.6 per cent fall. The retailer said sluggish sales during the quarter were due to “weak consumer sentiment and adverse weather”. Kingfisher said it was making progress with its plan to “restructure and modernise Castorama France’s lowest-performing stores”. Earlier this year, the group said that it would review the future of a third of its troubled Castorama stores after the French chain’s like-for-like sales fell significantly.The group runs more than 2,000 shops in eight countries, with Britain and France its biggest markets by some way. Its brands include Koctas in Turkey.
Kingfisher said that trading in the fourth quarter had improved, with like-for-like sales down 0.5 per cent in the three weeks to November 23.It enjoyed a boom in demand for DIY products during the pandemic as people used the time offered by lockdowns to spruce up their homes. Profits surpassed £1 billion in the year to March 2022, while the shares peaked above 370p. However, there has since been a decline, due to a slowdown in demand amid the cost of living crisis and tough comparatives.
Richard Chamberlain, an analyst at RBC Capital Markets, the investment bank, said: “Kingfisher has developed a stronger digital and trade offer in the UK, which it can now look to develop in other markets. We see potential for DIY trends to be fairly resilient, helped by consumers looking to save money and to improve their homes.”Shares in Kingfisher fell 39½p, or 13.4 per cent, to 255½p in morning trading on Monday.
Screwfix, which is aimed at builders, plumbers and electricians, has acted as the one bright light for Kingfisher during the third quarter. The business posted sales of £681 million in the third quarter, up from £651 million during the same period last year.
Kingfisher’s performance in the UK and Ireland during the three months to October 31 was largely due to strong sales growth in Screwfix. The brand reported a 1.8 per cent increase in like-for-like sales during the third quarter driven by positive volume growth.
The FTSE 100 group said the company’s building and joinery and outdoor categories performed well during the three-month period due to “robust demand” from trade customers. Screwfix also opened six new stores in its UK and Ireland market in the third quarter as the business continued its expansion.
Thierry Garnier, the chief executive of Kingfisher, said the group’s Screwfix stores had reported “particularly strong market share gains”.
The group also expanded the presence of Screwfix in France as it focuses on growing its brand awareness there. The DIY retailer opened one new shop during the third quarter, bringing its total number of stores in France to 26.
Kingfisher said its Screwfix stores in France had reported “encouraging sales trends” and had reported growth in its customer base compared with the same period last year.
Richard Chamberlain, an analyst at RBC Capital Markets, said the bank was “attracted to the growth potential of Screwfix, albeit it will likely take time to gain critical mass and become profitable outside the UK”.