By James Davey
LONDON (Reuters) -European home improvement retailer Kingfisher (LON:KGF) warned profit would fall again this year after a 25% slump in its 2023-24 year that reflected a particularly weak French market.
Shares in the FTSE-100-listed group, which owns B&Q and Screwfix in Britain and Castorama and Brico Depot in France and other markets, were down 2% in morning trading, extending falls over the last year to 11%.
CEO Thierry Garnier said that while repairs, maintenance and renovation activity on existing homes gave the business resilience, it was cautious on the overall outlook for market growth in 2024.
"While we see some early positive signs for housing activity, we know there's a lag between housing demand and home improvement demand," he told reporters.
Echoing other retailers, he said the UK consumer was proving "very resilient" despite inflation and high borrowing costs, but the group expected the UK & Ireland home improvement market to be at best "flat" in 2024.
Garnier expected continued subdued consumer confidence and a weak housing market in France this year and forecast the market would see a "low single-digit" decline at best. He was more optimistic about Poland.
Kingfisher plans to simplify its business in France, including restructuring the Castorama store network, through modernising, "rightsizing", transferring stores to the Brico Depot format and franchising.
The group forecast an adjusted pretax profit for 2024-25 of 490 million to 550 million pounds ($618-$693 million), below analysts' average forecast of 560 million pounds.
It said like-for-like sales in the first quarter so far were down 2.3% year-on-year, with an improved sales trend in the UK and Ireland, France and Poland compared to the previous quarter, and an improved volume trend in all three product categories - core, 'big-ticket' and seasonal.
For 2023-24, Kingfisher made an adjusted pretax profit of 568 million pounds, in line with guidance that was cut in November, but down from the 758 million pounds it made a year earlier.
Total sales fell 1.8% to 12.98 billion pounds, with like-for-like sales down 3.1%.
While like-for-like sales in the UK and Ireland were up 0.8%, they were down 5.9% in France and down 9.5% in Poland.
The group is also targeting 120 million pounds of additional cost reductions and productivity gains, to partially offset higher pay rates and technology investments.