Home improvement retailer Kingfisher (LON:KGF) rallied after the B&Q-to-Screwfix owner raised FY27 profit and free cash flow guidance in the face of a tough consumer backdrop. The upgrade followed a solid H1 performance from the FTSE 100 retailer, which highlighted market share gains at Screwfix, Castorama Poland and in Spain.
Over in France, the Castorama chain delivered a welcome return to growth in Q2. Unfortunately, the Brico Depot business was negatively impacted by heatwaves due to its product mix.
And B&Q like-for-like sales in the UK & Ireland fell 1.8% in Q2 as big ticket sales slumped 8.1% amid lower demand for bathroom ranges.
Solid H1 showing
Kingfisher’s adjusted pre-tax profits ticked up almost 10% to £404 million in the half to July, driven by gross margin gains, ‘disciplined’ cost control and a £14 million one-off business rates refund. Total sales edged up 0.8% to £6.86 billion, while like-for-like sales were 0.1% to the good.
| Q2 – Like-for-like sales | Big-ticket | Q2 26/27 |
| B&Q | -8.1% | -1.8% |
| Screwfix | +4.6% | +7.1% |
| Castorama | -3.4% | +0.1% |
| Brico Depot | -9.7% | -5.4% |
| Poland | -1.6% | +4.3% |
| Iberia | +5.6% | +8.6% |
Source: Kingfisher, H1 results
B&Q like-for-likes in the UK & Ireland dropped 1.8% in Q2, but the decline marked an improvement on the 4.1% fall seen in Q1, as heatwaves drove a recovery in demand for seasonal categories. And Kingfisher’s Screwfix business continued to flourish, generating a 7.1% jump in Q2 like-for-likes.
Profit guidance upgrade
For FY27, Kingfisher is now forecasting adjusted pre-tax profits in the £595 million to £635 million range, up from £565 million to £625 million previously. The company also raised its free cash flow forecast to between £480 million and £520 million, up from £450 million to £510 million.
Outgoing CEO Thierry Garnier said: ‘We delivered a solid H1 performance, growing sales, gross margin and profits through market share gains and continued momentum across trade, e-commerce, marketplace and group sourcing.
‘We are building a stronger, more resilient Kingfisher, with our strategic priorities creating new growth opportunities and strong financial discipline supporting performance across the business. While the consumer environment remains mixed, our consistent delivery, strategic progress and opportunities ahead give us the confidence to upgrade our guidance.’
This is a welcome profit upgrade from Kingfisher, which continues to win market share against a soft market backdrop. The company’s trade proposition is strengthening and its e-commerce business is growing nicely.
However, we wouldn’t rush to buy the shares. The firm is grappling with elevated operating costs and a mixed consumer backdrop across key markets. And Kingfisher’s sales are weather-sensitive and volatile as a result.
Higher inflation and potential interest rate rises could continue to weigh on consumer confidence and activity in the housing market, constraining spending on discretionary home improvement categories.
Strangely, there is still no news on a successor to the well-regarded Garnier, who announced plans in May to step down after nearly seven years in the hot seat to head up Netherlands-headquartered supermarket Ahold Delhaize (VIE:AD).
