- Weaker trends across broader market
- Gains in UK & Ireland, France, Poland
- ‘Encouraging’ big-ticket sales in Q4
Kingfisher (KGF) shares were the FTSE 100’s biggest faller on 25 March, slumping 12% to 246.5p after the home improvement retailer reported declines in full-year revenue and profit amid weaker demand for big-ticket items.
The B&Q-to-Castorama owner faced particular challenges in France, where like-for-like sales slumped 6.2% in the year to January 2025 amid a ‘soft consumer backdrop’.
Guidance for the current year also disappointed investors, implying a year-on-year decline in pre-tax profit and free cash flow at the bottom end of the forecast range.
BIG-TICKET DRAG
Results for the year ended 31 January 2025 revealed a 1.5% drop in sales to £12.78 billion with like-for-like sales down 1.7%.
Adjusted pre-tax profit fell 7% to £528 million and free cash flow nudged down 0.6% to £511 million, although Kingfisher felt sufficiently confident in its prospects to maintain the dividend at 12.4p and launch a further £300 million share buyback.
While like-for-like sales grew 0.2% in the UK & Ireland - where Kingfisher called out a ‘relatively resilient consumer’, market share gains at B&Q and another positive performance from Screwfix - sales in France, where the company trades as Castorama and Brico Depot, slumped 6.2% on a like-for-like basis.
‘In France, the unstable political environment weighed on the economy and consumer confidence in 2024, which remained subdued throughout the year,’ the retailer explained.
By product category, core like-for-like sales slipped 0.9%, supported by repair, maintenance and renovation activity on existing homes, although big-ticket like-for-like sales fell 4.4% amid ‘weaker trends across the broader market’.
On a more optimistic note, Kingfisher highlighted ‘encouraging’ big-ticket sales trends in the fourth quarter and insisted it was in its best operational shape for years, leaving it well-equipped to cope with the higher costs arising from recent government budgets in the UK and France.
WHAT DID THE CEO SAY?
For the year to January 2026, Kingfisher guided to adjusted pre-tax profit of between £480 million to £540 million and free cash flow of £420 million to £480 million.
‘For the first time in over six years, we grew our market share in all key regions,’ insisted chief executive Thierry Garnier.
‘We delivered profit and free cash flow in line with or ahead of our initial guidance, with strong delivery against our strategic objectives.’
Garnier added: ‘Our restructuring of Castorama France is progressing and we have accelerated our plans. As expected, the wider market backdrop was a headwind, though we maintained our laser focus on managing costs and cash, removing £120 million of structural costs and lowering same-store inventory by over £100 million.’
STUCK IN REVERSE
Russ Mould, investment director at AJ Bell, said Kingfisher was ‘stuck in reverse gear. The B&Q owner is one of the most shorted stocks on the UK market as hedge funds bet that its problems can’t be fixed in the current fragile retail environment. They have been right so far, with the shares slumping even further on its latest set of results.’
Mould continued: ‘Every key figure apart from gross margins was in reverse on a full-year basis. Guidance for the new year includes a wide profit range, the bottom end being worse than that achieved in the past year. Cash flow is also expected to be worse year-on-year.
‘It’s all very well starting the results by saying its market share grew in all regions for the first time in over six years and launching a new share buyback programme. Investors aren’t fooled – Kingfisher is broken and something has to change fast. If Wickes (WIX) and DFS (DFS) can show resilience in a tough market, there is no excuse for Kingfisher not to keep its head above water.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Ian Conway) own shares in AJ Bell.
