Kingfisher issues another profit warning amid weak sales in France

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The owner of B&Q and Screwfix has sounded the alarm on profits for the second time in just over two months, blaming sluggish sales and warmer weather in France.

Kingfisher expects pre-tax profits to be £30mn lower than its previous guidance at £560mn this financial year owing to “a weak retail market [in France], as well as a delayed start to insulation, plumbing and heating sales” as a result of “unusually warm autumn weather”, chief executive Thierry Garnier said.

The company, which also owns French brands Castorama and Brico Dépôt, said it would deliver £470mn of free cash flow, compared with previous guidance of more than £500mn. Shares fell 6 per cent to 216p in morning trading in London.

“Reflecting the weakness of the French market, and notwithstanding our proactive cost actions, we have lowered our group profit guidance for the full year,” Garnier said.

The latest profit warning comes after Kingfisher cut its annual profit forecast from £634mn to £590mn in September, due to tougher trading in France and Poland.

Like-for-like group sales dropped by 3.9 per cent to £3.2bn in the three months to October 31, dragged down by its French performance, where sales were down 8.6 per cent to £1bn during the period. In contrast, the UK market was more resilient, recording a 1.1 per cent increase in sales to £1.5bn.

Kingfisher, which is in the middle of a turnaround, said current trading was mirroring the same trends in the past three months, reversing the pandemic DIY boom.

Analysts at RBC Capital Markets were bullish about its prospects despite the profit warning: “Kingfisher has developed a stronger digital and trade offer in the UK, which it can now look to develop in other markets.

“We see potential for home improvement trends to be fairly resilient, helped by consumers looking to save money, hybrid working, aged housing stock in the UK and France, and an increased focus on energy efficiency, although we appreciate the operating leverage of Kingfisher to like-for-like sales forecasts.”