Kingfisher PLC (LSE:KGF) could be hit by slowing consumer demand in France while the prospect of a new entrant to the market also poses a threat.
Shares in the owner of B&Q, Castorama, Brico Dépôt, Screwfix, and TradePoint were 1.9% after the comments from investment bank, JPMorgan.
The broker thinks consensus financial 2025 forecasts for both the UK and France are over ambitious – it is around 10% below consensus - particularly with the latter seeing signs of a weakening consumer.
It reiterated an 'underweight' rating and placed the stock on negative catalyst watch ahead of the third quarter trading update on November 22.
JPM pointed out a September 2023 survey results which show a significant worsening in the outlook for French DIY spending with the net balance falling to -22% while recent profit warnings in France could signal a weakening consumer.
Longer mortgages in France provide some protection in a rising rates environment but housing starts and new mortgages have nevertheless materially deteriorated, now 29% and 43% below pre-pandemic levels, the bank pointed out.
JPM reckons softening consumer demand could be exacerbated if key competitor, Leroy Merlin, expands its increasingly promotional stance from Poland into France.