- Targeting upper end of guidance
- Free cash flow forecast improved
- Buyback programme accelerated
Kingfisher (KGF) shares bounced 18% to 298.5p after the B&Q-to-Screwfix owner delivered a surprise profit guidance upgrade in the face of significant cost headwinds and subdued consumer spending on big-ticket purchases.
Following a solid first-half showing, the home improvement giant is now targeting the ‘upper end’ of full-year 2026 guidance for adjusted pre-tax profits of between £480 million to £540 million.
The FTSE 100 retailer also raised its annual free cash flow guidance from the £420 million to £480 million range to between £480 million and £520 million and confirmed its £300 million share buyback programme remains on track to complete by March 2026.
ROBUST HALF
Results for the half to July 2025 showed Kingfisher continuing to navigate home improvement sector headwinds with group sales broadly flat at £6.81 billion as the post-pandemic DIY boom continued to fade.
And yet Kingfisher secured market share gains in the UK, France and Spain and kept profits broadly in line with expectations thanks to tight cost control and strong growth with valuable trade customers.
The retailer saw sequential improvement in underlying trends in core and big-ticket categories, and robust sales growth in seasonal products due to warm UK weather which helped drive sales of garden furniture and barbeques.
Kingfisher reported strong UK performances from both B&Q and Screwfix, with like-for-like sales up 4.4% and 3% respectively, as well as improving sequential trends in the subdued-but-improving markets of France and Poland.
WHAT DID THE CEO SAY?
Thierry Garnier, CEO, commented: ‘In a higher cost environment, we remain disciplined on managing costs and cash. Our margin and operating cost initiatives combined with the positive impact of our strategic drivers enabled us to deliver 10.2% growth in adjusted pre-tax profit and 16.5% growth in adjusted earnings per share. Free cash flow rose by 13.5%.’
He added: ‘Our expectations for our markets for the year remain consistent with what we outlined in March, whilst mindful of mixed consumer sentiment and political uncertainty. Combined with our first-half performance, this gives us the confidence to upgrade our full-year profit and free cash flow guidance and to accelerate our share buyback programme.’
SUSTAINABLE PATH
AJ Bell investment director Russ Mould said Kingfisher’s decision to accelerate its share buyback programme and guide for a full-year outcome at the top end of current guidance was ‘a decent show of confidence. While sales remain fairly sluggish, Kingfisher has kept a tight rein on costs and has captured a larger number of trade customers - which typically buy a higher volume of items and often higher value ones too. It is also doing a decent job of maintaining and building on its robust market position.’
Mould added: ‘The company may never get back to the levels of demand seen during the pandemic. Back then households had the means and incentive to spend money on doing up indoor spaces in which they were spending most of their time and other parts of the retail sector couldn’t trade from physical outlets.
‘However, Kingfisher is showing signs of setting itself on a sustainable path and investors are reacting accordingly.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Tom Sieber) own shares in AJ Bell.
