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Can Kingfisher Avoid Another Hammering Following Results?

Published 19/09/2017, 13:11
Updated 09/07/2023, 11:32

Can Kingfisher (LON:KGF) avoid another hammering following Wednesday’s interim results?

The B&Q-owner has really fallen apart since hitting a 6 month high of £3.70 back in May. A major blow was dealt with the company’s first quarter update, with Kingfisher plunging nearly 18% in the 3 weeks that followed the release.

The main issue with that Q1 update was the ongoing problems in France, where Kingfisher owns the Castorama and Brico Depot brands. The region saw a 5.5% fall in like-for-like sales, more than double the full year comparable sales drop revealed back in March.

This dragged the group’s like-for-like sales down by 0.6%, negating the 3.5% rise seen in the UK and Ireland, where Screwfix led the charge with a remarkable 12.6% surge in sales. On top of its galling Gallic performance the company also claimed it was suffering some ‘business disruption’ due to its ‘One Kingfisher’ restructuring plan.

The stock spent the next few months stuck between £2.95 and £3.10, but was looking to break out above that latter level on the eve of the company’s second quarter statement – if only. Instead Kingfisher fell 4% as it revealed an 8% plunge in sales and a 4.7% drop in like-for-likes. Since then it has only fallen even further, hitting a near 3 year nadir of £2.85 in early September. Kingfisher PLC now sits at a current trading price of £2.99.

So, is there any positive potential in Wednesday’s half year report? Maybe not. While revenue is set to rise 4.5% to £6 billion, any goodwill generated by that increase will likely be overshadowed by the expected 20% fall in earnings to 10.8p per share.

Kingfisher PLC has a consensus rating of ‘Hold’ with an average target price of £3.30.

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