Home-improvement retailer cuts profit guidance for the second time this year due to sales slump in France

By Louis Goss

Kingfisher PLC on Wednesday cut its profit guidance for the second time this year, as it warned its sales are set to suffer due to unfavorable markets in France.

The FTSE 100 company said it now expects to generate GBP560 million ($702 million) in pretax profits for 2023, compared to previous guidance of GBP590 million, as an uptick in sales in its British business was offset by plunging sales in Europe.

Shares in Kingfisher PLC (UK:KGF), which owns French home improvement retailers Brico Dépôt and Castorama, fell 6% on Wednesday having fallen by 13% over the previous 12 months.

Kingfisher PLC said the lower outlook for the full year reflects weak sales in France, as the result of a slump in the country's retail market and lower heating, insulation and plumbing sales due to unusually warm autumn weather conditions, to which Brico Dépôt is heavily weighted.

The London-listed company's decision to cut its profit guidance comes after the B&Q owner previously lowered its full-year guidance in September, from GBP634 million to GBP590 million.

Kingfisher PLC, which first took control of B&Q in 1982 after buying out its parent company Woolworths, said like-for-like sales in its U.K. and Irish businesses, which account for around half of its revenues, increased 1.1% in the three months ending on Oct. 31.

The retail giant, which later took control of French DIY company Castorama and its subsidiary Brico Dépôt in 2002, warned that like-for-like sales in its French business fell 8.6% in the quarter ending on Oct. 31, while sales in its international arms fell 7.6%.

Kingfisher has this year sought to offset the impact of lower sales in its French business, by cutting costs in the division, including by laying off staff. The company, however, warned that its cost-cutting efforts in France will not be enough to offset the division's lower sales.

"A second successive profit downgrade has scotched any hopes of recovery at Kingfisher, with the French operation being the latest culprit for further weakness," Richard Hunter, head of markets at Interactive Investor said.

Kingfisher's guidance cut comes after U.S. home improvement giant Lowe (LOW) on Tuesday said its sales fell 7.4% in the third quarter, due to a slump in spending on DIY.

-Louis Goss

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11-22-23 0453ET

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