- Kingfisher’s shares up around 7% in early trade making it the top FTSE 100 gainer.
- The company raised the bottom end of its profit outlook with seasonal category sales trends have improved since early July.
- Now it expects an adjusted pretax profit for 2024/25 of £510-550million, having previously forecast £490-550million.
- Profit fell 0.5% to £334million pounds in its first half to 31 July, with like-for-like sales down 2.4%.
Susannah Streeter, head of money and markets, Hargreaves Lansdown:
‘’It’s clearly still been tough going in the home renovation market, as consumers have tightened their belts amid high borrowing costs but there are bigger chinks of light at the end of the tunnel. With more interest rate cuts eyed on the horizon, and the housing market starting to spring into life, the outlook looks better, leading Kingfisher to improve its profit outlook. A spurt of better weather later in the summer is likely to have helped propel sales of seasonal ranges. This is a trend also flagged up in the latest snapshot from the British Retail Consortium, which showed that as the sun shone more in August, shoppers were more encouraged to snap up DIY and gardening items and host BBQs. The company is now expecting adjusted pretax profit to come in between £510 and £550 million, instead of in a range of £490 to £550 million. Investors had already expected a difficult reading for the first half, so the fall in profits by 0.5% didn’t knock sentiment further. The improved picture ahead has led to a spurt of enthusiasm for the company, with Kingfisher shares getting off to a flying start in early trade.
Nevertheless, it’s still going to clearly take time before the company is firing on all cylinders. Bigger ticket items are still likely to continue to be harder to shift. Some consumers appear to have been ring-fencing spending for holidays and experiences rather than major makeovers, although the value DIY offering will offer resilience for those customers keen to do it themselves to keep costs low. That’s helped the chain shift higher volumes of its core products as homeowners repair and maintain and spruce up their properties. However, clouds still hover over its French Castorama operations, where the economic conditions have been far from clement.‘
