European home improvement retailer, Kingfisher, has revised its profit outlook for the second time in three months after experiencing a decline in third quarter sales. The company, which owns popular brands such as B&Q and Screwfix in the UK, as well as Castorama and Brico Depot in France, reported a 3.9% drop in underlying sales. Market trends in France were weaker than expected, leading to the downgrade in profit outlook.
Kingfisher now forecasts an adjusted pretax profit of approximately £560 million for the 12 months ending in January 2024, compared to the £590 million that was initially projected in September and the £758 million generated in the previous financial year (2022/23).
Despite the overall decline, the company saw a 1.1% increase in like-for-like sales in its UK and Ireland division during the three months to October 31. This growth resulted in an expansion of Kingfisher’s market share in the region. However, in France, like-for-like sales declined by 8.6%, with Brico Depot experiencing particularly poor performance.
Kingfisher also noted a 9% decrease in like-for-like sales in Poland, although this represents an improvement compared to the first half of the year.
The company stated that its fourth quarter began in line with the trends observed in the third quarter.
These developments have raised concerns about Kingfisher’s financial performance, prompting the need for a reassessment of its profit expectations. The weaker market trends in France, in particular, have impacted the company’s overall sales figures.
The company’s downgrade in profit outlook reflects the challenges faced by retailers in the current economic climate. Uncertainty surrounding Brexit and its potential effects on consumer spending have contributed to a more cautious approach from shoppers, affecting sales across various sectors.
Kingfisher’s experience highlights the importance of adapting to evolving market conditions. The company’s performance in the UK and Ireland demonstrates its ability to maintain growth and gain market share, even in a challenging environment. However, its struggles in France indicate the need for a reevaluation of its strategies in that region.
Despite the downgrade, Kingfisher remains optimistic about its future prospects. The company aims to address the issues faced in France and Poland, with plans to implement targeted measures to improve sales performance. Kingfisher’s ability to successfully execute these strategies will play a crucial role in determining its financial performance moving forward.
Investors will be closely monitoring Kingfisher’s progress, as the company works to regain its market position and maximize profitability. The revised profit outlook serves as a reminder of the ongoing challenges faced by retailers, but also presents an opportunity for Kingfisher to adapt and thrive in an ever-changing business landscape.
More detail via Reuters here… ( Image via Reuters )