Kingfisher KGF.L, owner of B&Q and Castorama, raised the low end of its annual profit outlook, saying that while demand for “big ticket” home improvements such as kitchens and bathrooms remained weak, seasonal sales trends have improved since early July.
Shares in the FTSE 100-listed European retailer, which also owns Screwfix in Britain and Brico Depot in France, rose 7% on Tuesday, hitting their highest level in more than two years.
High interest rates and macroeconomic uncertainty have put pressure on demand for major home improvement projects on both sides of the Atlantic. Last month, U.S. giants Home DepotHD.N and Lowe’sLOW.N warned about the outlook.
Kingfisher reported flat first-half profits but said there were “positive early signs” of a recovery in the property market, particularly in the UK.
General manager Thierry Garnier told reporters that the most expensive category remains kitchens.
“There are two trends. Firstly, we are seeing a lower demand for kitchens and secondly, when a kitchen is sold, a cheaper kitchen is sold,” he explained.
However, he added: “We are seeing a kind of plateau in the first and second quarters, it is not worse, it is stable.”
He also said that after a very poor April, May, June and early July, sales of seasonal products such as outdoor furniture, barbecues, fencing and decking had picked up.
Kingfisher said it was strongly positioned for growth in 2025 and beyond and now expected 2024/25 adjusted pre-tax profit of £510m-£550m ($674m-$727m), having previously forecast £490m-£550m. It made £568m in 2023/24.
Profit on the same basis fell 0.5% to £334m in the first half to July 31, with like-for-like sales down 2.4%. The company said it gained market share in Britain and Poland, with weak sales in France in line with the market.
“Overall, turnover in the first half of the year was in line with our expectations,” said Garnier.
“This was supported by customers continuing to repair, maintain and renovate their existing homes, driving resilient volume trends across our core product categories.”
The group said comparable sales fell 0.3% in the third quarter so far.
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