FY22 was a record year for Kingfisher, benefiting from elevated demand for Home during COVID and also reflecting progress made on implementing its ‘Powered by Kingfisher’ strategy. Management completed all the ‘fixes’ in the UK & Poland and expects to complete France in FY23. Kingfisher has emerged post pandemic with a strong balance sheet. IFRS16 net debt/EBITDA was 1x at year end with potential to gear up further in our view. Year end net debt increased to £1,572m (LY £1,394m) reflecting a working capital outflow, driven by inventory rebuild and inflation, and the commencement of a £300m share buyback (£75m left to do). Investment in growth is being accelerated with the launch of a scalable e-commerce marketplace, expansion of Screwfix in the UK and France, new store openings in Poland and investment into in its trade and digital offer. Downgrading FY23E/FY24E PBT by 2.6%/2.9% respectively (c.4% below company guidance), reflecting more cautious UK gross margin assumptions (inflation/more pricing activity), higher start-up losses from Screwfix France/Marketplace/NeedHelp partially offset by higher profits from Poland. Management said it was comfortable with FY23 market consensus of £769m (down 19% on FY22), which reflects a ‘normalised’ post COVID cost base. Valuation (CY23E PE 9.6x) is not particularly demanding and appears to reflect the expectation of lower FY23 profits. However, given how fast market drivers are changing, uncertainty remains over what ‘normalised’ future earnings could look like and whether KGF can be a sustainable growth story, it is difficult to see the shares performing, particularly given the inflationary headwinds on consumer spending ahead. Ultimately, KGF is still a big box retailer and the structural challenges have not gone away. Our TP, now based on a low double-digit CY23E PE to reflect increased trading risk, falls to 285p (prev 335p).