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Kingfisher has cut its annual profit forecast as the home improvement retailer faced tougher markets in Poland and France, sending its shares down more than 5 per cent.
The retailer, which owns the DIY chain B&Q in the UK and Castorama in France, said on Tuesday that pre-tax profits for the year would be £590mn, below a previous target of £634mn.
Chief executive Thierry Garnier said the guidance had been cut “to better reflect our performance in [the first half] and the trading environment in our markets”.
Despite “good growth” in the UK, he said: “We face . . . a weaker trading environment in Poland, while consumer confidence in France is at a 10-year low.”
The group’s like-for-like sales in the first half were 2.2 per cent below last year while third-quarter sales were so far down 2.4 per cent.
Garnier, who has been spearheading a turnaround of the company, said in March that he expected inflationary pressures would ease in the second half as some costs — including shipping — dropped.
Kingfisher on Tuesday said it remained positive on the medium-to-long term outlook and “confident in our ability to grow market share and deliver our medium-term financial objectives”.
One reason for the company’s confidence, Garnier said, was that working from home was “here to stay”, giving customers greater incentive to invest in home improvement products and renovations.
Combined with a less active housing market, slowed by high rates, that incentive is even greater.
“You’re moving less so you spend more time to renovate and maintain,” Garnier said, adding that there has been particularly strong demand for expensive kitchen and bathroom projects.
Along with renovations, the company has reported strong growth in insulation-led sales as UK customers focus on improving the energy efficiency of their homes.
“Insulation-led sales at B&Q and insulation sales at Screwfix grew by 43 per cent,” Garnier said.
Online sales across brands have also been positive, increasing 7.1 per cent in the period as the company expanded its product range on B&Q’s DIY.com to 700,000 compared with 40,000 on the launch of the online marketplace in March last year.
Despite a positive overall performance in the UK, the company said seasonal sales across all countries had been hit by extreme weather, down 27 per cent in March and 22 per cent in July.
Kingfisher also announced a new £300mn share buyback programme, following £600mn of buybacks in the past two years.
