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Kingfisher PLC on Tuesday cut its annual profit outlook, with sales in July hurt by wet weather, though the owner of a number of DIY chains announced a new share buyback.
Shares in the B&Q parent were 6.0% lower at 221.40 pence each in London on Tuesday morning, the worst FTSE 100 performer.
For the six months to July 31, Kingfisher reported sales rose 1.1% to £6.88 billion from £6.81 billion a year earlier.
However, pretax profit slumped by a third year-on-year to £317 million from £474 million. Adjusted pretax profit was 29% lower at £336 million from £472 million. Selling and distribution expenses were 5.0% higher at £1.63 billion from £1.55 billion.
Kingfisher said sales in the first half were ‘slightly ahead of expectations’, falling 1.0% at constant currency over the six months. Like-for-like sales declined 2.2% on-year, having fallen 1.2% in the second quarter and 3.3% in the first.
However, it noted a weaker July than a year prior.
‘In July our trading momentum was affected by unseasonably poor weather (particularly in the UK and France), against a comparative month of July 2022 which saw an unusual heatwave across the UK and Western Europe. Given this, LFL seasonal sales for the group were down 22.3% for the month. However, we saw a clear trend of customers moving to more indoor-based projects, with LFL sales from our core and ’big-ticket’ categories up by 2.1% for the group. Iberia and Romania experienced more normal weather conditions and saw an acceleration in sales trends in July versus May and June, supported by seasonal category sales,’ Kingfisher said.
Like-for-like sales in the third quarter to date are down 2.4% year-on-year, with Kingfisher hurt by ‘a slight slowdown in the sales trend’, where it owns the Castorama chain.
Chief Executive Officer Thierry Garnier said: ‘Trading in the UK & Ireland continues to have positive momentum. However, to better reflect our performance in H1 and the trading environment in our markets, we have updated our profit guidance for this year and are proactively managing our operating costs accordingly. We remain very positive on the medium-to-long term outlook for home improvement growth in our markets, and confident in our ability to grow market share and deliver on our medium-term financial objectives.’
Kingfisher now expects adjusted pretax profit for the full year of £590 million, its guidance cut from £634 million previously. The new outlook would represent a 22% fall from the £758 million achieved in the year ended January 31.
It said it remains on track to reduce its net inventory this financial year, and still expects free cash flow of £500 million.
In addition, Kingfisher announced a new £300 million share buyback programme, which it expects to begin in early October. Kingfisher also maintained its interim dividend at 3.80 pence per share.
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