Must read: what you need to know ahead of Kingfisher’s results

Kingfisher Q1 – Tuesday 26 May

Kingfisher has had a number of false starts in recent times, with generally pedestrian rather than transformational progress. Indeed, the annual results in March were something of a curate’s egg, with strong UK performances being partly offset by some ongoing international weakness.

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Like-for-like sales for the year fell by 1.1% in Poland, by 2.2% at Castorama in France, and by 2.3% at Brico Depot. The long-suffering Castorama unit remains in focus as the group simplifies and modernises the store estate and increases reliance on e-commerce sales, although this restructure is a slow burner.

In sharp contrast was a strong performance from the UK units, where streamlining, favourable weather and an increasing penetration of Own Exclusive Brand (OEB) products lifted spirits. Like-for-like sales grew at 3.3% for the UK as a whole, comprising hikes of 3.3% and 3.2% for B&Q and Screwfix respectively. For the latter, long since Kingfisher’s jewel in the crown, the unit continued to hold its own against ever stronger comparatives and is finessing its optionality, with 75% of sales now coming from trade and 60% from e-commerce. This is quite apart from an early stage international rollout, with a longer-term ambition of 600 stores in France.

Nonetheless, challenges remain. Increased taxes in both the UK and France are a burden on the group, while big ticket and seasonal sales expose Kingfisher to both cyclical pressure via housing markets as well as unpredictable weather. In addition, the current conflict in Iran threatens to push energy costs higher, while the consumer could also retrench, quite apart from the fact that the housing market is yet to show any signs of a sustained recovery. 

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Meanwhile, a dividend yield of 4.4%, alongside a further £300 million share buyback programme are price supportive. The outlook for this year also implies further progress, with adjusted pre-tax profit expected to fall within a range of £565 million and £625 million (£560 million last year), although free cash flow growth could be limited with a range of between £450 million and £510 million expected (£512 million last year).  

The outlook for the company among investors is also mixed. The shares have fallen by 12% just this year, are 22% lower than the highs reached during the DIY boom of the pandemic, and are 33% down from the previous peak reached in March 2014. Even so, the shares are not obviously cheap in terms of historic valuation and the jury remains out on prospects.