B&Q owner tightens guidance as housing market improves

Early signs of a housing market recovery in Britain have prompted B&Q owner Kingfisher to lift its lower-end forecast target.
The DIY retailer, which also owns Screwfix, said it expected adjusted annual pre-tax profit of between £510 million and £550 million. That was up from previous guidance of £490 million to £550 million and despite weak demand for big-ticket items and continued troubles in its French business.
Thierry Garnier, its chief executive, said improving mortgage rates and housing prices had given Kingfisher “further confidence that we remain strongly positioned for growth in 2025 and beyond”.
Shares in Kingfisher closed up 32½p, or 11.2 per cent, to 323p after the upward revision and better-than-expected first half earnings.
Pre-tax profit rose 2.3 per cent to £324 million in the six months to the end of July, helped in part by a one-off £25 million business rates refund at B&Q.
However, sales fell 1.8 per cent to £6.9 billion during the same period. Like-for-like sales — those from stores open at least a year — were down 2.4 per cent across the group, which has outlets in the UK and Europe.
Garnier, who has been seeking to turn around the group since 2019, blamed “weak” demand for big-ticket products such as bathrooms and kitchens. Those items fell 6.8 per cent year on year.
Sales in France fell by 7.2 per cent year on year due to a continued “soft consumer backdrop”. “That market is really, really weak,” Garnier said, adding that the “perception of inflation” in France was higher than in the UK, while political uncertainty in the country had also added to its woes.
Kingfisher said it was making “rapid progress” with its restructuring plan for its Castorama chain in France, with “works completed or in motion on 13 low-performing stores”. Operating costs in the country were down 3 per cent in the period.
The group runs more than 2,000 shops in eight countries, with Britain and France its biggest markets by some way. Its brands include Koctas in Turkey.
The retailer enjoyed a boom in demand for DIY products during the pandemic as people used the time offered by lockdowns to spruce up their homes. Profits surpassed £1 billion in the year to March 2022, while the shares peaked above 370p. However, there has since been a decline, due to a slowdown in demand amid the cost of living crisis and tough comparatives. Last year, Kingfisher issued two profit warnings as it said that a weak economy would dismantle its earnings for the full year.
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Oliver Maddison, an analyst at GlobalData, said that improvements in the housing market and consumer buying power were “likely to support B&Q’s big-ticket sales moving forward, while initiatives such as the expansion of the B&Q Local fascia and the recently announced partnership with Deliveroo should have the effect of reducing B&Q’s mix of big-ticket items, sheltering it from future swings while expanding its presence in the other categories”.
Despite the downturn, Kingfisher confirmed that it still planned to open more stores across its various fascias. At B&Q, it said there were about 50 catchments or geographic “white spaces” in the UK where the retailer is currently underrepresented.
At Screwfix, it is on track to open 40 new stores in the UK and Ireland during the current financial year, with a medium-term goal of over 1,000 stores. This includes its ultra-compact format Screwfix City stores, with nine such stores currently in operation. The business aims to open up to 100 over the next few years.
Kingfisher said it was on track to achieve about £120 million of cost reductions for the full year, weighted towards the first half.
The company maintained its interim dividend at 3¾p per share. It expects to complete its £300 million share buyback by March next year.