On Monday, Kingfisher Plc (LON:KGF:LN) (OTC: KGFHY), saw its stock given a Hold rating and a price target of £2.10 by Jefferies, following the announcement of its fiscal year 2024 results.
The company reported a quarter-over-quarter decline in like-for-like sales (LFLs) of 4.3%, which was below the consensus estimate of a 2.6% decrease and a further drop from the third quarter's 3.9% decline. This performance reflected weaker results across all areas of the business.
Despite the lower LFLs, Kingfisher's profit before tax (PBT) for FY24 was slightly higher than anticipated, coming in at £568 million against the consensus of £557 million. This was attributed to stringent cost control measures. Furthermore, the company's free cash flow (FCF) for the fiscal year was £514 million, surpassing expectations of £364 million.
The current trading update revealed that Kingfisher's LFLs are around -2.3%, which is below the consensus estimates. This indicates a slowdown in the two-year stack, with the fourth quarter at -3.9% and the first quarter at -5.6%. Consequently, the company's guidance for FY PBT is approximately 6% below the consensus, with projections ranging from £490 million to £550 million.
Looking ahead, Kingfisher has set a target for its French operations, aiming for a retail profit margin of approximately 5-7%. This goal is ambitious considering the region's profit margin was around 3.3% for FY24. The strategy to reach this target involves simplifying operations and enhancing performance within the French market.
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