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Kingfisher dives again as bearish brokers come out of the woods

Published: 10:56 23 Mar 2017 GMT

bear in the woods
Citi reckons Kingfisher's target of reaching £500mln incremental profit by 2020/21 looks "stretched"

Kingfisher PLC (LON:KGF) shares stumbled again on Thursday as bearish brokers came out of the woods in response to the B&Q owner's final results which were published yesterday.

Decent performance in the UK and currency boosts thanks to the weak sterling helped to mask declining sales (on a constant currency business) in its French business.

The outlook for France in particular, but also for the UK, wasn’t too optimistic either, prompting a sharp fall in the share price throughout trading on Wednesday.

Heavyweight bank Citi said it remained a seller of the company – which also owns Screwfix – as it thinks growing earnings per share is likely to be “difficult”.

“Potentially weak UK demand, heightened risk of continued market share losses in France, slower growth in Poland and little visibility on the delivery of the transformation plan in outer years are likely to weigh on earnings,” said Citi analyst Assad Malic.

Speaking of the five-year turnaround plan implemented by Kingfisher chief executive Véonique Laury last year, Malic said he remains unconvinced of its possible rewards.

Kingfisher’s aspirations of reaching £500mln of incremental profit by 2020/21 look stretched,” the analyst said in his note to clients.

He also reckons the weaker UK demand environment could drag on like-for-like sales at B&Q, which is Kingfisher’s largest individual brand and the main contributor to revenues.

Shares in the DIY retailer fell 1.3% to 323p on Wednesday morning, although they had sunk to as low as 318p earlier on.

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