UK’s Kingfisher says trading resilient despite profit fall

British home improvement retailer Kingfisher (LON:KGF) on Tuesday reported a 29.5% fall in first-half profit but said trading was resilient despite a cost of living crisis that is eating into household budgets.

CEO Thierry Garnier told reporters that sales of all product categories, with the exception of outdoor, had returned to positive like-for-like sales growth over the last week.

“When we look at customer demand we don’t see major changes that could show clearly the impacts (of) cost of living,” he said, noting customers were not massively trading down to entry priced ranges or to private label products.

He said demand for the ‘big ticket’ categories of kitchens and bathrooms was robust, while sales of insulation products had soared as consumers seek savings on their energy bills.

“Overall, we see a pretty resilient sales trend,” he said.

Despite that, shares in Kingfisher, which owns B&Q and Screwfix in Britain and Castorama and Brico Depot in France and other markets, were down 5.5% at 0849 GMT on concerns over the outlook for the year.

Kingfisher made an adjusted pretax profit of 472 million pounds ($539 million) in the six months to July 31, a touch ahead of analysts’ average forecast and versus a COVID-19 boosted 669 million pounds a year earlier.

Total sales fell 2.8% on a constant currency basis to 6.81 billion pounds, while like-for-like sales fell 4.1%, having risen 22.8% in the same period last year. The group said it had won market share.

It said third-quarter trading was consistent with its 2022-23 adjusted pretax profit guidance of about 770 million pounds.

Like-for-like sales in the third quarter so far were down 0.7% on the year but up 15.2% on a three-year basis.

However, Kingfisher has run several trading scenarios to take into account the potential for a more uncertain economic environment.

These point towards profit outcomes of 730-770 million pounds, down from 949 million pounds in 2021-22.

($1 = 0.8757 pounds)