Shares in DIY retailer Kingfisher (KGF) gained 1.5% after FY25 earnings met expectations and the group launched a new buyback. The report wasn’t as upbeat as the Wickes (WIX) results last week, but the buyback is considerably larger.
Making progress
Group sales for the year to January 2026 were £12.95 biliion, slightly ahead of the consensus. LFL sales growth was 1.4%, also slightly ahead of consensus and the nine-month run rate.
As expected, B&Q and Screwfix turned in the best performances with LFL growth of 3.3% between them. That was in line with analysts’ forecasts, which had B&Q growth pegged at 3.5% and Screwfix at 3.1%.
The French businesses, Castorama and Brico Depot, reported LFL sales down 2.2% and 2.3% respectively, slightly below forecasts. Yet both operators outperformed their home market and took share away from their rivals, which was a plus.
CEO Thierry Garnier flagged the firm’s success in attracting more trade customers along with enhanced ranges and strong online sales. ‘We are making rapid progress against our strategic priorities across our banners’, added Garnier.
Thanks to better sourcing and cost discipline, the group delivered a 15% uplift in operating profit to £469 million. The firm also cited AI-driven promotions and improved inventory management for the profit improvement.
Buyback renewed
Adjusted pre-tax profit rose 6% to £560 million, fractionally ahead of the consensus. Adjusted EPS rose 15% to 23.8p, also fractionally ahead of estimates, while the dividend was held at 12.4p.
Free cash flow of £512 million was mainly driven by earnings growth and working capital management. Meanwhile, leverage fell from 1.6 times to 1.4 times adjusted EBITDA helped by around £100 million of one-off inflows.
Having completed its recent £300 million share buyback, the group announced a further £300 million repurchase plan. It also confirmed its FY27 pre-tax profit and free cash flow targets, which are in line with market forecasts.
Kingfisher is never going to be a high-growth, high-margin company, but it has made good progress under Garnier. An 80 basis point increase in the operating margin on a business of this scale is not to be sniffed at.
In an ideal world, the French and Polish subsidiaries would be chipping in with positive LFL sales growth. That may still happen, but the firm is still making market share gains nonetheless and hopefully these new customers are ‘sticky’.
We aren’t fans of buybacks in general, and would have liked to see the dividend increased rather than held again. However, after the stock’s recent drubbing this is as good a level as any to be repurchasing the shares.
Read the press release here: https://www.kingfisher.com/investors
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