LONDON (ShareCast) - (Sharecast News) - Shares in Kingfisher slumped on Tuesday after the DIY retail group forecast small earnings growth this year at best and warned of the impact of budgetary measures in the UK and France on consumer sentiment and costs in the short term.
The company, which owns B&Q and Screwfix in the UK along with Brico Depot and Castorama in France, posted a 7% fall in adjusted pre-tax profit to £528m and announced a £300m share buyback.

It expects expected adjusted earnings of £480m to £540m for the 2025/26 fiscal year. Shares in the firm finished down 14% in London trade.

"Looking to the year ahead, the recent government budgets in the UK and France have raised costs for retailers and impacted consumer sentiment in the near term," said chief executive Thierry Garnier.

"With this in mind, we remain focused on what is in our control - progressing our strategic objectives at pace to deliver further market share gains, and continuing to manage gross margin, costs and cash effectively."

Group sales fell 1.5% to £12.8bn year on year as steady trade in the UK and Ireland and strong growth in Poland was offset by a continuing large slide in French operations.

The company said it would offset the higher tax costs by fast-tracking plans to reduce the size of its distribution centres, in the UK, France and Poland and putting more self-checkouts in stores. It estimated that higher UK employer national insurance contributions and similar taxes in France would come in at around £45m and the impact of the new packaging fees regulations in the UK at £10m.

AJ Bell investment director Russ Mould said Kingfisher was "stuck in reverse gear" with the company "one of the most shorted stocks on the UK market as hedge funds bet that its problems can't be fixed in the current fragile retail environment".

"Interestingly, the amount of stock on loan to short sellers dropped ahead of the figures. On 12 March, 6.6% of the stock was shorted. A week later, that figure had dropped to 4.9%, indicating that short sellers were losing their nerve in case Kingfisher's problems hadn't got any worse and the shares bounced back," he said.

"The market reaction to the figures was one of utter disappointment and short sellers who kept their trades live were vindicated. Every key figure apart from gross margins was in reverse on a full-year basis. Guidance for the new year includes a wide profit range, the bottom end being worse than that achieved in the past year."

"Investors aren't fooled - Kingfisher is broken and something has to change fast. If Wickes and DFS can show resilience in a tough market, there is no excuse for Kingfisher not to keep its head above water."

Reporting by Frank Prenesti for Sharecast.com

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