Kingfisher shares rocket as UK consumer resilience lifts DIY retailer's profit outlook

Kingfisher PLC, the owner of B&Q and Screwfix, upgraded its profit outlook after reporting a stronger-than-expected first half, driven by a resilient UK consumer. The group said that in the six months ended 31 July, UK sales rose 3.9% to £3.5 billion, helping to lift total revenue and support a higher profit estimate despite headwinds abroad.

Total sales for the period rose 1.3% to £6.8 billion, while half-year pretax profit increased 10.2% to £368 million, thanks in large part to strong demand for kitchen and bathroom ranges. Chief executive Thierry Garnier said the UK market remained buoyant and that the performance validated the resilience of Kingfisher’s core DIY model in a tricky macro environment. The company now expects annual profits to land at the upper end of the £480 million to £540 million guidance range.

The update sent Kingfisher’s shares higher, with the stock up as much as 19.5% to around 301.4 pence in early trading. Analysts noted the result underscored the pull of staple DIY players in a period of cost pressure and political uncertainty as the Budget nears. Garnier, who has steered a cost-conscious turnaround in recent years, said the group remained mindful of upcoming fiscal measures and inflationary pressures that could affect consumer spending. “We are mindful of what is ahead of us with the budget, with inflation that is still high, especially with food,” he said.

Still, the retailer faces a complicated cost backdrop. Kingfisher said it would fully mitigate the about £145 million in increased wages, taxes and inflation through its cost initiatives. The environment is likely to be influenced by policy changes, including proposals by Labour to reform business rates that could hit larger-format retailers with big premises. Garnier described the levy reforms as a “key concern” and said it was too early to quantify their impact, but he remained optimistic that the group could offset higher costs through efficiency and productivity measures.

Beyond the UK, Kingfisher operates Screwfix in the UK and Castorama in France, and Garnier noted that while the group faces softer momentum in some markets, it continues to protect market share through a combination of trade-focused service and pragmatic pricing. The six-month results came as retail sentiment in the UK remained fragile, with the British Retail Consortium warning that food inflation could stay well above 5% into next year, complicating households’ budgeting and discretionary purchases.

Analysts offered mixed assessments of the guidance and the balance of UK demand against international softness. Garry White, chief investment commentator at Charles Stanley, said Kingfisher’s interim results showed a business navigating persistent headwinds in the home-improvement sector, with sales growth largely flat as the post-pandemic DIY boom fades. “Despite challenging conditions in the UK and France, the group maintained its market share and kept profits broadly in line with expectations, underpinned by tight cost control and a focus on trade customers,” White said.

The results come as Kingfisher continues to manage costs and pursue efficiency initiatives, including a planned restructuring at its B&Q brand that the retailer announced earlier this month, which included job cuts of more than 650 positions. Executives emphasized that restructuring is aimed at preserving margins while continuing to support a robust core business. The decision underscores the broader challenge for large-format home improvement retailers as they balance wage bills, inflation and the evolving political environment with consumer spending patterns.

The timing of the update places Kingfisher at the center of investor attention as markets gauge how UK retailers can sustain earnings in a period of elevated living costs and modest wage growth. While the UK market has provided a bright spot, the group’s European exposure means management will likely stay vigilant for any shifts in consumer sentiment or policy changes that could alter the cost structure or consumer demand in the months ahead.

Kingfisher’s leadership has stressed that while the company faces a challenging environment, its diversified model and operational discipline position it to respond to shifting conditions. The company has a track record of delivering profits above the £1 billion mark in recent years, a benchmark that reflects its ability to monetize demand for home improvement through multi-brand coverage across the UK and continental Europe. As markets turn into the second half of the year, investors will be watching to see if UK demand persists and whether price-sensitive consumers can sustain activity amid ongoing cost pressures.

Additionally, the company faces external risks linked to government policy on business rates, labor costs and inflation, all of which could influence consumer behavior and the competitive dynamics of the DIY sector. Kingfisher’s ability to sustain momentum will depend on its capacity to manage costs, maintain inventory discipline and continue converting transactions into higher-margin sales across its portfolio.

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