Kingfisher shares have been fairly resilient and are currently up over 13% year-on-year…
However, the B&Q owner has faced a year of significant economic headwinds that look likely to continue into 2023. But with the home improvement company reporting its full year results on Tuesday, what can investors expect.
In the group’s third quarter trading update, Kingfisher reported total sales grew 1.7% and saw a good start to trading in the first three weeks of the fourth quarter, with like-for-like sales up 2.8%.
Much of Kingfisher’s growth was driven by the strong demand for energy efficient products, as energy prices soared across the UK and consumers looked for other ways to save on their bills.
As a result, Kingfisher is expected to report a strong end to the financial year and anticipates its FY22/23 adjusted pre-tax profit in the range of £730m to £760m.
However, it is not all plain sailing for Kingfisher, as the business will likely suffer from higher costs following its investment in its Screwfix rollout into France and Poland. And whether this rollout will be successful is reliant on ensuring Screwfix France does not erode sales at Brico Depot, one of Kingfisher’s international brands.
Furthermore, heading into 2023, the damaging UK housing market may likely have a knock-on effect on DIY chains such as Kingfisher.
However, Jefferies analyst James Grzinic has argued in favour of the UK general retailers sector, raising Kingfisher to a Buy from Hold to reflect the ongoing deflation of energy prices. In addition, Grzinic states that Kingfisher displays the greatest valuation/forecast upside to current inputs.