Shares in Kingfisher took off after the home improvement retailer changed its full-year profits guidance to the upside.
At 310.20p per share, the FTSE 100 firm was last dealing 6.9% higher in Tuesday’s session.
Kingfisher — which owns the B&Q and Screwfix chains in the UK — said that sales dropped to £6.8 billion in the six months to July. This was down 1.4% year on year, or 2.4% on a like-for-like basis.
However, margin improvements meant that operating profit ticked 2% higher to £374 million. Pre-tax profit, meanwhile, rose 2.3% from the same 2023 period, to £324 million.
As a consequence, Kingfisher said full-year profit before tax would likely total between £510 million to £550 million. This is up from a former guided range of £490 million to £550 million.
The retailer also predicted free cash flow of £410 million to £460 million. It had previously tipped a range of £350 million to £410 million.
Kingfisher kept the interim dividend locked at 3.80p per share.
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Between February and July, Kingfisher’s margins increased by 40 basis points to 36.7%, it said. This was thanks to “maintaining competitive price indices and disciplined promotional activity in all markets.”
Margins were also boosted by continued cost-cutting, with the retailer forecasting £120 million worth of cost savings over the financial year.
Robust inventory management also saw its net inventory decline 4.3% year on year.
In the UK and Ireland, like-for-like sales dipped 0.2% year on year, to £3.4 billion. The firm said that seasonal sales were affected by poor weather in the second quarter, while revenues from so-called big ticket items remained “weak.”
At £2.1 billion, like-for-like sales in France dropped 7.2%. Kingfisher, which operates the Castorama and Brico Dépôt chains, noted that “the home improvement market continued to be impacted by a soft consumer environment.”
Like-for-like sales in its international markets edged 0.2% higher, to £1.3 billion, thanks to strength in Kingfisher’s Iberian and Romanian territories.
“Strongly Positioned”
Chief executive Thierry Garnier said that “trading overall in the first half was in line with our expectations. This was underpinned by customers continuing to repair, maintain and renovate their existing homes, driving resilient volume trends in our core product categories.”
He noted that “as expected, demand for ‘big-ticket’ categories has remained weak, in line with the broader market, while seasonal category sales trends have improved since early July. Against this backdrop we maintained a strong focus on effectively managing our costs and inventory.”
Garnier added that “with positive early signs of a housing market recovery, notably in the UK, Kingfisher is strongly positioned for growth in 2025 and beyond.”
“Chinks Of Light”
Hargreaves Lansdown analyst Susannah Streeter noted that “it’s clearly still been tough going in the home renovation market, as consumers have tightened their belts amid high borrowing costs but there are bigger chinks of light at the end of the tunnel.”
She commented “with more interest rate cuts eyed on the horizon, and the housing market starting to spring into life, the outlook looks better, leading Kingfisher to improve its profit outlook.”
However, Streeter added that “it’s still going to clearly take time before the company is firing on all cylinders.” She said that big ticket items “are still likely to continue to be harder to shift,” and noted that conditions remain difficult for its French stores.