22nd Mar 2022 14:24
(Alliance News) - Shares in Kingfisher PLC were lower on Tuesday as concerns arose as to whether the DIY retailer can maintain increased consumer interest in home improvement which flourished during the pandemic.
Kingfisher on Tuesday lifted its payout as it enjoyed a "record" year for earnings, benefiting as the pandemic-induced jump in demand for home improvement endured last year.
The FTSE 100 listing owns the B&Q and Screwfix brands in the UK, as well as Castorama in France.
The stock was down 4.3% at 278.70 pence Tuesday, among the worst blue-chip performers.
In the 12 months that ended January 31, sales rose 6.8% to GBP13.18 billion from GBP12.34 billion. At constant currency, sales were up 9.7%.
Pretax profit rose by a third to GBP1.01 billion from GBP756 million.
Kingfisher hailed it "a year of record revenue and profits".
Sales topped the GBP11.51 billion achieved in the pre-pandemic financial 2020. Pretax amounted to just GBP103 million that year, though Kingfisher had taken a GBP441 million hit from exceptional items in financial 2020.
Turning to shareholder returns, Kingfisher raised its annual payout by 50% to 12.40 pence per share from 8.25p paid out the year before. In addition, it said the final GBP75 million tranche of a GBP300 million buyback will be completed by May.
Kingfisher said it is "comfortable" with sell-side analyst consensus for the new financial year. Consensus for adjusted pretax profit is GBP769 million, which would represent a 19% fall from GBP949 million in the year just ended.
The retailer said first quarter like-for-like sales were down 8.1% from the year before, but up 16% from two years earlier.
During the Covid-19 pandemic, Kingfisher enjoyed a sales boom as consumers were confined to their homes and took up DIY projects. However, as the pandemic subsides and work from home guidance was lifted, people have less time to spend at home.
"Kingfisher benefited from people looking to do up their homes during the pandemic, however the world has since moved on and, despite management reporting a strong start to the current year, there has to be a risk that the company's moment in the sun has passed," remarked AJ Bell's Russ Mould.
Added Neil Shah, head of research at Edison: "The challenge of customers shifting away from home renovation, on top of [the] weak macroeconomic climate, will determine the group's performance for the rest of 2022."
By Arvind Bhunjun; [email protected]
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