22nd Nov 2023 10:14
(Alliance News) - DIY retailer Kingfisher PLC slumped to the bottom of the FTSE 100 index on Wednesday, after it said sales declined in the third quarter and lowered its full year guidance in response.
Kingfisher shares were down 5.9% to 217.00 each on Wednesday morning in London.
"B&Q-owner Kingfisher had a great opportunity to fix the roof while the sun was shining during Covid. As one of the few retailers still able to trade during a period when people were keen to refresh the home in which they were spending an inordinate amount of time, the company saw big gains in profit and its share price," said Russ Mould, investment director at AJ Bell.
"This had followed years of uneven performance and today's profit warning suggests the company is returning to its patchy form of the past. The issue this time is the French business which is performing worse than expected."
The B&Q-owner said sales in the third quarter ended October 31 declined 2.1% to GBP3.24 billion from GBP3.26 billion a year ago.
In UK & Ireland, sales amounted to GBP1.60 billion during the quarter, up 3.3% year-on-year from GBP1.55 billion.
However, the growth in the UK & Ireland was more than offset by an 8.7% decline in French sales to GBP1.03 billion from GBP1.10 billion. Sales in Kingfisher's Other International region fell 3.7% to GBP608 million from GBP621 million a year ago.
Kingfisher opened four Screwfix stores in France during the quarter, as well as launching Screwfix online in six new European markets.
interactive investor's Richard Hunter said it was the second successive profit downgrade and "has scotched any hopes of recovery at Kingfisher."
Looking ahead, Kingfisher said it expects adjusted pretax profit of around GBP560 million, compared with GBP758 million a year ago. It had cut guidance in September to GBP590 million from GBP634 million.
Chief Executive Thierry Garnier explained: "Our UK banners performed well in Q3, with B&Q, TradePoint and Screwfix growing sales and market share. In France, our performance was impacted by a weak retail market, as well as a delayed start to insulation, plumbing and heating sales - to which Brico Depot is more heavily weighted - due to unusually warm autumn weather, and strong prior year comparatives in these categories.
"As we move into 2024, we are focused on what is in our control. First, a continued focus on growing market share in the UK, France and Poland with delivery of our strategic growth initiatives."
Garnier added: "On the medium-to-longer term outlook, we remain very positive for home improvement growth in our markets, and our ability to grow ahead of our markets."
Garnier took up the top job at Kingfisher in September 2019, before Covid-19 took hold in early 2020.
In its financial year ended January 31, 2022, the company had hailed "a year of record revenue and profits". Sales and profit were boosted by the Covid-19 pandemic.
By Sophie Rose, Alliance News senior reporter
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