(Bloomberg) -- Kingfisher Plc shares plunged after the company narrowed its full-year guidance to the lower end of the range, as budget-related uncertainty in the UK and France weighed on consumer sentiment.
The stock, which was up 21% this year before today, slumped as much as 14% to 252.2 pence in London, the biggest intraday decline since March 2020. The home improvement company now expects full-year adjusted pretax profit of £510 million ($641 million) to £540 million, narrower than its previous range of £510 million to £550 million, according to a statement.
“Improved performance in August and September was offset by the impact of increased consumer uncertainty in the UK and France in October, related to government budgets in both countries,” Chief Executive Officer Thierry Garnier said in the statement. Like-for-like sales fell 1.1% at constant currency in the three months ended Oct. 31.
Kingfisher expects the impact of higher national insurance taxes to be about £31 million in the UK and around £14 million in France, if the draft Finance Bill is enacted through the French parliament. It said efforts to mitigate the effect on retail profit will only partly offset the impact of both measures.
What Bloomberg Intelligence Says:
Kingfisher’s downgraded pretax-profit guidance highlights deeper challenges in the company’s French Castorama and Brico Depot chains, including low sales densities and a soft consumer backdrop. Management’s narrowed fiscal 2024-25 range — lowered to £510-£540 million (from £510-£550 million), after an upward revision in September — is likely to reduce consensus profit by about 2%.
— Tatiana Lisitsina, BI consumer-goods analyst
Click here for the research.
The company said trading has been improving in the fourth quarter and kept its free cash flow guidance of £410 million to £460 million unchanged.
(Adds Bloomberg Intelligence comment in fifth paragraph. Updates shares.)
©2024 Bloomberg L.P.
