B&Q owner Kingfisher launches £300m share buyback after 'resilient' trading
UK home improvement retailer Kingfisher (KGF.L) reported strong post pandemic growth in the first quarter as the owner of B&Q announced plans for a further £300m share buyback and repeated its profit guidance for the current year.
The London-listed group, which also owns the Screwfix brand, said sales in the three months to April 30 2022 were £3.2bn, a like-for-like rise of 16.2% compared to pre-pandemic 2019, although sales were down 5.4% like-for-like compared to the first quarter last year.
The dip was due to an exceptionally strong year last year, as more people embraced DIY during the COVID-19 crisis.
The company announced a return of a further £300m of surplus capital via a share buyback programme, with the first tranche to commence soon. This move is aimed at “delivering attractive returns for our shareholders,” chief executive, Thierry Garnier, said.
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The group also said sales had improved in the first two weeks of May, driven by "resilient demand" across both its DIY and trade operations.
Kingfisher said it was continuing to manage inflation pressures effectively and product availability was good, approaching pre-pandemic levels.
“We continue to effectively manage inflationary and supply chain pressures. As a result, our product availability is now very close to ‘normal’ levels across all our banners, and we continue to deliver value for our customers through our own exclusive brands and competitive prices,” Garnier said.
The company reiterated profit guidance for this year, anticipating adjusted pre-tax profit of £770m.
The company’s online business grew 164% compared to 2019, and now represents 16% of the company’s total sales, compared to 7% three years ago.
“We are focused on delivering on our strategic objectives and growth initiatives, including the growth of our scalable e-commerce marketplace, the expansion of Screwfix in the UK and France, new store openings in Poland, and further increasing our trade customer base.”
Richard Hunter, head of markets at Interactive Investor, said: “Kingfisher is unquestionably in a better position than it was leading up to the pandemic, although it is becoming increasingly difficult to match the highs experienced during lockdowns as the DIY boom played into its hands.
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“However, Kingfisher cannot manage the current economic outlook and the propensity of the consumer to spend, which has inevitably weighed on the performance of the stock. Whereas the previous concern had been that pent-up holiday demand would replace the DIY share of individual spending (which has been seen to an extent), the next few months are likely to represent a demanding time if the cost of living crisis emerges as is largely expected.
"The share price graph thus reads as a commentary as to the company’s fortunes over the last couple of years. Having doubled since the pandemic low, the shares have lost 34% over the last year, which compares to a gain of 5% for the wider FTSE100.
"Prospects from here on in are uncertain despite the best efforts of the company to manage the factors within its control, which it has done successfully in more recent times. As such, the market consensus of the shares as a hold reflects the fact that some of the positive momentum which the company has enjoyed of late could be put to the test as this year unfolds.”
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