For the first couple of months of 2018 the B&Q-owner was doing pretty well. Carrying over the momentum it found at the end of 2017, by the end of February the stock was trading at £3.65, its best level for 9 months. However, investors began to lose their confidence in early March, a move that appeared to be justified when Kingfisher fell 13% in the 46 hours following its full year results.
Having struck a low of £2.90, a rebound in April led the stock back to £3.10. That rise proved to be brief, with Kingfisher eventually hitting a 5-ish year nadir of £2.78 in early May. Kingfisher PLC now sits at a current trading price of £2.94.
As is clear from the sharp decline that greeted the results, March’s annual report was short on positivity. Though revenue rose 3.8% to £11.7 billion, on a constant currency basis it actually fell 0.3%, with pre-tax profit plunging 10.1% to £682 million.
Like-for-like sales, meanwhile, dropped 0.7%, mainly thanks to issues in France, where comparable sales lurched 3.5% lower. In the UK LFLs were actually up 0.6%, with B&Q’s 2.8% decline compensated for by Screwfix’s muscular 10.1% surge. Internationally Poland was once again the highlight, the country posting a 5.3% jump in like-for-likes against the broader 2% increase for the rest of the division.
The company blamed ‘business disruption’ related to its ONE Kingfisher rejig for the poor performance, claiming that such disruption would likely be ‘ongoing’ in 2018/19. It was also pretty muted in its outlook, pointing to ‘mixed picture’ with an ‘uncertain’ UK and ‘volatile’ French market, even if the firm did say it was ‘encouraged’ by the backdrop in the latter region.
It is clear investors are getting a bit sick and tired of waiting for the ONE Kingfisher transformation to yield results. If the company wants to get them back on board next week, then it needs to show that the sizeable like-for-like declines suffered by B&Q, Brico Depot and Castorama are easing.
Kingfisher PLC (LON:KGF) has a consensus rating of ‘Hold’ alongside an average target price of £3.45.
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