Home improvement giant Kingfisher (LON:KGF) rallied after hailing a ‘resilient’ start to FY27 and reaffirming guidance. The B&Q-to-Screwfix owner’s Q1 like-for-like sales softened 0.7% as a late start to spring impacted footfall.
However, that proved better than the 0.9% decline expected by consensus. And Kingfisher also reported a third quarter of sequential sales improvement at its French DIY retail business Castorama.
Hammering home guidance
For the year to January 2027, Kingfisher is on track to deliver adjusted pre-tax profits in the £565 million to £625 million range. With its latest £300 million share buyback ongoing, Kingfisher also reiterated guidance for free cash flow of between £450 million and £510 million.
Outgoing CEO Thierry Garnier said the FTSE 100 titan had made a ‘resilient’ start to the new financial year. Core categories held up ‘even as a late start to spring impacted footfall and seasonal demand’.
Big-ticket slowdown hurts B&Q
In the UK & Ireland, B&Q’s like-for-likes fell 4.1%. This reflected a strong prior year comparator, as well as a late start to spring which impacted footfall and seasonal sales. A soft bathroom market also weighed on big-ticket sales, though this was partly offset by strength in new kitchen ranges.
Elsewhere in the UK & Ireland, Kingfisher reported ‘significant’ market share gains at Screwfix. The chain is benefiting from resilient demand from professional tradespeople. Screwfix’s like-for-like sales grew 4.1% in Q1.
And the brand has been exported to France, where its first store has made a strong start. Across the Channel, like-for-likes fell 1.1% at Castorama. However, this represented a third successive quarter of improvement. Performance was boosted by improvements to stores and product ranges as well as ‘good seasonal sales’.
Unfortunately, like-for-likes at Brico Depot declined 3.1% with big-ticket sales ‘impacted by a subdued project environment’. And Q1 like-for-likes in Poland fell 0.2% as seasonal sales were impacted by cold weather.
What did the CEO say?
Garnier commented: ‘While mindful of the consumer environment, we remain absolutely focused on delivering our strategy, disciplined gross margin and cost management, and consistent shareholder returns.
‘We are confident in achieving our full-year guidance and are well positioned to capitalise on the attractive long-term growth opportunities across our markets.’
Kingfisher continues to win market share against a soft market backdrop. The company also continues to attract more trade customers and is growing e-commerce sales in the double-digits.
Nevertheless, we wouldn’t be in a rush to own the shares given a mixed consumer backdrop across its markets.
Keep in mind, Kingfisher’s sales are highly weather-sensitive. And 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.
Read the press release here: https://www.kingfisher.com/investors
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