Kingfisher shares drop on weak profit outlook, Q3 sales miss

Shares in Kingfisher tanked on Monday after the B&Q and Screwfix owner nudged down the midpoint of its annual profit guidance following a weak third quarter, in which group like-for-like sales fell more than forecast.

The company, which also owns the Castorama and Brico Dépôt chains in France as well as other outlets across Europe, said full-year adjusted pre-tax profit is expected to come in between £510m and £540m, compared with previous forecast range of £510m to £550m.

At the midpoint of guidance, this represents a decline from £568m last fiscal year and below current consensus expectations of £533m.

Sales in the three months to 31 October totalled £3.22bn, down 0.6% on a reported basis and down 1.1% in like-for-like terms, much worse than the 0.2% expected by analysts.

Chief executive Thierry Garnier cited "increased consumer uncertainty" across the UK and France in October, which offset an improved performance in August and September.

UK and Ireland LFL sales were up 0.4% as a 0.6% drop at B&Q was offset by a 1.8% increase at Screwfix, with Kingfisher claiming the Autumn Budget which weighed on consumer sentiment, along with wetter than normal weather last month.

Across the Channel, LFL declines at both Castorama (-4.7%) and Brico Dépôt (-3.7%) meant LFL sales at the French division were down 4.3%.

Elsewhere, international LFL sales increased 0.5% with a strongly performance in Iberia (+6.6%) outweighing falling sales in Poland (-0.4%) and Romania (-2.0%).

Looking ahead, Garnier said recent political and macro developments have "layered incremental uncertainty onto the near-term outlook in our markets", though the group is positioned strongly to benefit from an expected inflection in DIY markets.

Trading in the fourth quarter so far has shown the LFL decline easing slightly to 0.5%.

The stock was nearly 14% lower at 254.3p by 1126 GMT, pulling back sharply after a strong 38% run over the past year.

"The continuing trend of hybrid-working and energy efficient renovations help underpin sales, and the strength of the Screwfix brand is self-evident," said Richard Hunter, head of markets at Interactive Investor.

"However, the clear disappointment resulting from this update, whereby Kingfisher needs some home improvement of its own, also means that any upgrade to the current market consensus of the shares as a hold is off the table for now.”