B&Q owner Kingfisher PLC's (LSE:KGF) group-wide sales fell 0.6% on a year-on-year basis in the third quarter, with a sharp 6.4% decline in its second-largest market France offsetting low-single-digit gains in the UK and Ireland.
Both markets are facing uncertainty due to their governments’ respective Budgets, said chief executive Thierry Garnier.
"Overall trading in the third quarter was resilient. 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,” stated Garnier.
Retailers and hospitality businesses in the UK have expressed universal concern over the financial impact of Labour chancellor Rachel Reeves’ Autumn Budget.
Reeves announced a raft of costly measures, including a higher minimum wage and an increase to employer National Insurance Contributions (NICs).
In an open letter Reeves, 79 signatories, including the British Retail Consortium (BRC), urged her to reconsider measures they say will add £7 billion in 2025.
Kingfisher added to the chorus today by warning that “we expect to offset the impact of wage increases through structural cost reductions and productivity gains”.
Reeves’ Budget will add approximately £31 million to next year’s expenses, the company added.
In France, changes to social taxes and the postponement of the abolishment of a sales-based tax will add another £14 million.
“The combination of these measures in the UK and France is therefore c.£45m on Group retail profit. We are developing a range of additional mitigations, but at this stage expect to offset only part of this impact,” said Kingfisher.
The FTSE 100-listed group has decided to tighten its full-year profit-before-tax guidance to between £510 million and £540 million (previously between £510 million and £550 million).