Home improvement retailer Kingfisher warned that the effect of the Brexit vote and potential disruption from the French election could hit trade in its two main markets, sending its shares sharply lower on Wednesday.
The firm said that while demand in Britain, where it trades as B&Q and Screwfix, was holding up, it continued to underperform in France, where it operates as Castorama and Brico Depot.
“Looking forward, the EU referendum has created uncertainty for the UK economic outlook and we remain cautious on the outlook for France, especially in light of the forthcoming presidential elections,” said CEO Veronique Laury in the company’s annual earnings statement.
France will elect a new president in a two-stage contest to be held in April and May.
Ms Laury’s caution pushed Kingfisher shares almost 6 per cent lower, the worst performer on the FTSE 100 index, even though the company beat forecasts for 2016-17 profit, and said a five-year plan to restructure the business was on track after its first year.
“We remain sellers on the basis of the challenges posed by the static nature of the UK and French markets, likely impacts of channel switch on market leaders as digital evolves, and the sheer scale of the business risk here,” said Haitong analyst Tony Shiret.
Kingfisher’s finance chief Karen Witts said that despite fears of a UK consumer slowdown after last June’s Brexit vote, the firm had not yet seen any significant change in behaviour, pointing to lead indicators such as the number of tradesmen buying “big ticket” power tools and work wear at Screwfix. “That’s all holding up very well,” she told reporters.
However, Ms Laury said the firm had to do more to make its French businesses more competitive.
Last year she detailed a strategy to boost Kingfisher’s annual profit by £500 million (€576m) from 2021 that will cost £800 million (€921m) over five years to deliver. The plan involves unifying product ranges across the business, improving e-commerce capabilities and driving efficiencies. – Reuters
