Kingfisher heavy in London, weighs failure to raise guidance

(Il Sole 24 Ore Radiocor) - Solid first quarter results were not enough for British DIY number one Kingfisher, which slipped to the bottom of the London Stock Exchange and the Stooxx 600. Despite the DIY group beating analysts' estimates in the first three months of the financial year, traders are concerned about the "conservative outlook" announced by management and the failure to raise guidance, linked to "rising construction and household product costs".

In detail, Kingfisher - which has several brands in its portfolio such as B&Q and Screwfix in the UK, as well as Castorama and Brico Depot in France - reported sales of GBP 3.314 billion in the first quarter of 2025, which ended on 30 April, up 1.6%. The performance was particularly strong in the UK and Ireland, where revenues rose by 5.9%. However, the DIY group saw a 3.2 per cent decline in both France and Poland, a performance that analysts at Investec said disappointed the market. What puzzled investors and weighed on the stock, however, was above all the confirmation of guidance. Indeed, Kingfisher reiterated its full-year forecasts, with adjusted pre-tax profit of £480-540 million (compared to £528 million in the previous year) and a free cash glow of £420-480 million.

The first-quarter data reflected "a resilient consumer environment for DIY products", with "positive underlying trends" that may not be solely dependent on "seasonal demand", Citi commented. However, it is precisely this data that could have prompted "an increase in expectations, also helped by a smoother comparison with the previous year in the rest of the reporting period". For the experts at Rbc Capital Markets, Kingfisher's conservative stance could be due to the fact that 'consumer sentiment remains mixed in its markets', especially in light of the weaker-than-expected performance in Poland. For other traders, the probable entry into force of US tariffs and the possibility that these will dampen consumption also contribute to the company's concern. The impact of tariffs, according to management, will be minimal, but for traders Kingfisher has already begun to discount it 'with the recent price increase'. Finally, in today's trading session, the household goods retailer is also discounting the weakness of the retail sector, which is among the worst in the Old Continent.