Kingfisher warns of financial hit from UK and France budgets

Kingfisher said sales across their UK and Ireland stores were up 1.3% in the third quarter.

Screwfix and B&Q owner Kingfisher warned of a £45m (€53.9m) hit to profits from tax-raising measures in government budgets in both the UK and France, sending its shares sharply lower.

The group, which owns B&Q and Screwfix in the UK and Ireland, and Castorama and Brico Depot in France, also lowered the top end of its guidance for annual profit in the current 2024/25 year as it reported a 1.1% fall in third-quarter underlying sales, reflecting a weak market and consumer confidence in both countries in October.

Shares in Kingfisher were down 12% in trading yesterday.

The group said an increase in UK employers' National Insurance Contributions would cost it about £31m (€37m), while in France proposed changes to social taxes and the postponement of the abolition of a sales-based tax would cost it about €16.7m.

"We are developing a range of additional mitigations, but at this stage expect to offset only part of this impact," it said.

As regards a 6.7% increase in Britain's minimum wage, also announced in the UK budget, Kingfisher said it expected to offset the impact through structural cost reductions and productivity gains.

Last week, dozens of retailers, including Tesco and Sainsbury's, warned the UK budget will make both higher prices and job losses a certainty and dent investment.

Kingfisher said trading in August and September improved but was impacted in October by uncertainty related to the budgets.

It said all of its businesses reported sales in line or ahead of the market but noted sales of big-ticket, more discretionary, items continued to be weak, though it did see early signs of improvement.

Kingfisher now expects full-year 2024/25 adjusted profit before tax in the range of £510m to £540m (€607.4m-€643.4m). The group said trading had improved in the fourth quarter, with like-for-like sales down 0.5% in the three weeks to November 23.

Reuters