Poor Q3 trading and profit warning spook investors

Kingfisher’s trading performance for Q3 FY23/24 was below AV and the market’s expectations. The Group’s lfl sales declined by 3.9% yoy, once again due to a poor showing in France and Poland. The management issued a profit warning as the softness has continued even during the initial weeks of the Q4. We are likely to reduce our financial estimates by around 8-10% for the forecast years. However, the stock’s valuation is not expensive at the current levels and we maintain our positive recommendati

Despite decent sales performance, profit warning spooks investors!

Kingfisher’s H1 FY23/24 lfl sales was 40bp ahead of market expectations but the PBT was 5.4% weaker. Although UK&I sales remained in the black, the performances in France and Poland were the pain-points. The Q3 lfl performance (to date) of -2.4% yoy is also below market expectations. We expect the pressure on earnings to continue during H2. Management has lowered FY23/24 PBT guidance to £590m (vs £634m earlier). We will reduce the target price by 7-8% but maintain our positive recommendation.

Q1 trading: momentum led by the UK & Ireland

Kingfisher’s Q1 trading performance was stronger than ours as well as the market’s expectations. The Group’s lfl sales of -3.3% yoy was 140bp ahead of the consensus, mainly attributable to the UK&I (-0.8% yoy; +150 bp vs consensus). The impact of the adverse weather conditions and strikes in France are non-structural issues. The management has announced a better-than-expected start to Q2 and has also stated that it is comfortable with the current profit consensus. We maintain our positive stock

No surprises in the FY performance

Kingfisher’s FY22 performance was a mixed bag. The Group’s lfl sales declined by 2.1% yoy, with no surprises in the UK and France businesses. The adjusted PBT of £758m (-20.2% yoy) was 2.3% ahead of the market expectations. The FCF softness was a one-off in our opinion. We expect kingfisher to continue to gain market share in the core segments. The strategy to roll out compact store formats and monetize retail media opportunities are steps in the right direction. No major changes expected in ou

Resilient performance in Q3!

Kingfisher Q3 trading witnessed all banners performing ahead of market expectations. While lfls declined in the UK, the group’s lfl sales (+0.2% yoy) were led by the French and Polish businesses (+0.6% and +7.6%, respectively). Despite overall market share gains and a strong showing during the initial three weeks of Q4 (+2.8% yoy), investors disliked the hair cut in the FY22 PBT guidance (£730-760m vs £730-770m earlier). This is not a big issue in our view. We will upgrade our financial estimate

Decent show in Q2; testing times ahead!

There were no major surprises in Kingfisher’s H1 FY22/23 performance. The group’s lfl sales came in at -4.1% yoy (vs consensus of -4.2%). Almost all banners performed in line with expectations. A good start to Q3 also bodes well for Kingfisher to achieve FY22/23 consensus. However, we expect the overall business performance (home improvement demand) to come under pressure during the forecast years as rising inflation and a fragile economic outlook dents consumer sentiment. We maintain a positive

Riding on solid Q1 momentum!

Kingfisher’s Q1 trading was stronger than market expectations. Lfl revenue was 1.4% ahead of the street’s estimates, with the momentum led by all business segments. Among the positives: 1) the DIY and DIFM demand remains strong and, hence, management was able to pass on the pricing pressure to customers, and 2) Q2 has started on a similar note, and the supply chain is not concerning, at the moment. Still, we expect consumer demand to slow from H2 onwards.

A softer end to FY21

Kingfisher’s FY21 performance was a mixed bag – lfl sales were stronger than expected but the adjusted earnings missed the consensus slightly. Investors seem to be panicking due to management’s commentary about heightened macro-economic and geopolitical uncertainties plus a softer start to Q1 FY22/23. We do not see this as a surprise (considering the tough comparable base) and expect the company to continue gaining market share in key operating regions. No change to the stock’s recommendation.

Decent Q3 performance; outlook below expectations

Kingfisher’s Q3 trading sales were slightly ahead of our estimates. The company continued to gain market share and has also made a promising start to Q4 (+0.4% lfl up to 13 November). However, the stock slipped post the results as the FY21/22 outlook upgrade was disappointing, considering the momentum of company’s ytd performance. We do not see any structural issue with the business model and maintain the stock recommendation.

Strong H1 showing; tougher times ahead

Kingfisher reported better-than-expected figures at its H1 FY21/22 results, with lfl sales and adjusted PBT coming in ahead of market expectations and management’s guidance. Lfl sales outlook for H2 has been raised, the share buy-back programme re-introduced and the interim dividend increased. However, the share price was down c.5% today, as investors worried about inflationary cost pressures and supply chain constraints which are expected to continue into 2022. We will update our estimates and

Outperformance continues; however, the tailwinds start easing

Kingfisher’s Q2 FY21/22 trading update came in ahead of market expectations. Following an impressive c.64% lfl sales growth in Q1, the momentum finally receded with Q2 registering a sales decline of >1% so far, as DIY spend tailwinds unwind. On the back of the better-than-expected performance, management upgraded its sales and profitability outlook for H1 FY21/22. Although we will raise the estimates and target price, ‘Reduce’ recommendation is re-affirmed as DIY spend normalises and the limited

Strong Q1 sales momentum + upgraded FY profit guidance

Q1 sales galloped c.64% yoy (in lfl terms) as consumers’ demand for DIY products sustained, besides favourable comparables. Given the strong sales trends in Q1 and early May, management revised upwards its sales and adjusted PBT guidance. We will raise our estimates, but are likely to maintain our cautious stance as the current DIY spend momentum seems unsustainable.

Ending the year on a high

Kingfisher delivered better-than-expected FY20/21 results. The group’s lfl sales grew >15% yoy in Q4, bringing the FY sales growth to c.7%, driven by higher DIY consumer demand. Cost control measures along with robust top-line growth aided the retail profit to come in >27% higher. Looking ahead, management expects growth momentum to continue in the near term, with tough comparable and moderating consumer demand to weigh in on the top line in H2. Management has also resumed the dividend pay-out.

DIY keeps up the momentum

Kingfisher continued to register strong sales growth in Q4 FY20/21, buoyed by the higher DIY spend by consumers since the onset of the pandemic. Management continues to refrain from providing full-year revenue guidance, citing the pandemic-related uncertainties and the impact of lockdown restrictions. We maintain a positive outlook on the stock.

Well positioned for future success

Strong performance against tough market conditions

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