Demand resilient For the 3 months ended 30th April, total Group sales were down 5.8%. 2 year LFLs are now less relevant as these are lapping the 1st COVID lockdown now. 3 year LFL sales were ahead 16.2%. Demand for both DIY and DIFM/trade segments remained resilient. In terms of LFLs for the key divisions, B&Q -18.3% (3 year +16.3%), Screwfix UK -10.9% (3 year +18%), Castorama flat (3 year +13.9%), Brico Depot -7.5% (3 year +13.5%) and Poland +54.5% (3 year +22.8%). Good momentum into Q2 with LFL sales down 2.5% for the 2 weeks to 14 May, including a 1% adverse calendar impact, with 3 year LFL +21.8%. Outdoor picked up nicely and trade remains strong. Guidance reconfirmed; another £300m share buyback programme Management has reconfirmed guidance for FY23 adjusted PBT of c.£770m (company compiled market consensus is lower at £737m; INVe £741m). Management has announced another £300m share buyback programme reflecting confidence in outlook and strong cash generation. Forecasts/TP/Recommendation placed under review Valuation (CY22E/CY23E PE of 8.7x) is not that demanding, given the cash generation, and appears to reflect the expectation of lower FY23 profits and little growth into FY24 (company consensus £764m; INVe £765m). However, it is difficult to see the shares performing, particularly given concern on the impact inflation may have on short term discretionary consumer spending later in the year. Uncertainty also remains over what ‘normalised’ future earnings could look like and whether KGF can become a sustainable growth story. Management has stepped up growth investment, launching a scalable ecommerce market place as well as focusing on expanding Screwfix in the UK and France, new store openings in Poland and improving its Trade offer. However, KGF is still a big box retailer and structural challenges have not gone away.