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B&Q owner Kingfisher sees profits slide as lockdown DIY boom fades

Story Highlights

Home products retailer Kingfisher’s half-year revenues and profits fell sharply.

B&Q owner Kingfisher (GB:KGF) reported its half-year results for 2022 with almost a 30% drop in pre-tax profits to £472 million, as the boost from increased DIY during the pandemic fades.

During the first half, total sales were down by 4.1% to £6.8 billion.

Profits were also hit by rising operating costs, which reduced gross margin by 130bps to 36.7%. The retail profit margin was down by 260bps to 8.2%, pulling the profits down by 28%.

The company expects a better second-half looking at positive sales growth in most of its categories since August 2022.

For the full year 2022-23, the company expects its pre-tax profits to be between £730 and £770 million.

Retail profits in the UK and Ireland were the worst hit and were reduced by 41.3% to £339 million. This reflected higher costs incurred by the company in the launch of 88 new stores along with other high operating costs.

The company’s stock price was down 4% on Tuesday after the results were announced. In the year so far, the shares have been trading down by almost 30%.

What does Kingfisher Plc do?

Kingfisher is an international retailer providing home improvement products through stores and e-commerce channels – and is the owner of the iconic British DIY chain B&Q.

The company has operations in eight countries in Europe with brands such as B&Q, Castorama, Brico Depot, Screwfix, TradePoint, and Koctas.

Kingfisher share price forecast

According to TipRanks’ analyst consensus, Kingfisher stock has a Hold rating, based on a total of eight recommendations.

The KGF price target is 253.63p, which represents a 6.8% change in the price from the current level. The price target has a low and a high forecast of 305p and 203p, respectively.

Conclusion

Even though the company is optimistic about the second-half numbers, the analysts beg to differ.

Adam Vettese, an analyst at eToro, an investment company, commented on the results, “’If Kingfisher’s results are anything to go by, the pandemic-fuelled DIY boom is well and truly over. The trouble for all retailers, including Kingfisher, is that they are not only getting clobbered by the higher cost of goods but so too are their customers, meaning they are likely to spend less until the economic situation improves.”

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