Home improvement retailer Kingfisher (KGF) fell 5% to 349.7p as investors reacted to an anticipated slowdown in demand in the second half of its financial year.

More positively the company, owner of the B&Q chain, outlined plans to return £300 million to shareholders after guiding for a shallower than previously forecast drop-off in sales following a jump in first-half profit.

The company said the £300 million would be allocated to a share buyback programme, citing ‘strong cash generation and confidence in its outlook’.

For the six months ended 31 July 2021, pre-tax profit was up 70.6% to £577 million as sales increased 22% to £7.1 billion.

The interim dividend per share declared was raised to 3.80p from 2.75p.

GROWTH SET TO DWINDLE

Looking ahead, the company raised its second-half sales expectations, forecasting a decline of 3% to 7%, compared with prior expectations for a decline of 5% to 15%.

Full-year adjusted pre-tax profit was expected to be in the range of £910 million to £950 million against analyst forecasts for £912 million.

Third Bridge retail sector analyst Ross Hindle commented: ‘With a September surge of commuters now returning to the office and new leisure opportunities available, the pace of Kingfisher’s growth is likely to dwindle.

‘Ultimately these results are being announced in the context of second-half headwinds and an elevated comparison from last year.

‘The big questions for Kingfisher are: how do they retain the new-found consumers they picked up during Covid and how do they get Millennials more comfortable with DIY?

‘Kingfisher’s investment into digital is therefore doubly important as they seek to capture the data and the hearts of young people who don’t see DIY as something relevant.’

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Issue Date: 21 Sep 2021