Kingfisher unveils another £300m share buyback program as trading remains ‘resilient’ despite slowdown
- Kingfisher’s LFL online sales are up 164% in the first quarter since 2019
- The do-it-yourself industry has benefited from a strong business upswing over the past two years
- A temporary stamp duty exemption in the UK also boosted demand for DIY products
Screwfix owner Kingfisher will soon begin buying back a further £300m of its shares, less than a month after completing a buyback program of the same size.
The FTSE 100 home improvement retailer completed a separate £300m share buyback program at the end of April when it returned £75m in excess capital to shareholders.
Over the past two years, the home improvement industry has benefited from a business upswing as people spent more time at home and accumulated additional savings when lockdown restrictions remained tight.
New scheme: Screwfix owner Kingfisher just completed a separate £300m share buyback scheme at the end of April when it returned £75m in excess capital to shareholders
Demand was further spurred by Britons’ growing desire to live in more spacious properties and a temporary stamp duty exemption introduced by the UK government in summer 2020.
As a result, Kingfisher’s total like-for-like revenue rose 16.2 percent to £3.2 billion in the three months to the end of April, compared to the corresponding period three years ago.
All of the company’s territories and brands saw strong business growth, but there was a particularly strong expansion in online sales of 164 percent.
However, trading has stalled as Covid-19 restrictions were eased, but this has caused Kingfisher’s share price to plummet by more than a third over the past 12 months Kingfisher Shares closed up 2.2 percent at 252.2 pence on Monday.
The London-based group, which also owns B&Q and French DIY chain Castorama, announced today that its overall sales fell 5.8 percent compared to the same period last year.
In the British Isles, Kingfisher’s largest market, revenue slumped 14.2 per cent after rising two-thirds in 2021, with B&Q sales falling 17.8 per cent to just under £1 billion and those of Screwfix fell 7.1 percent to £572 million.
Weaker trading: Revenue at B&Q fell 17.8 per cent to just under £1bn in the first quarter after a strong comparative performance last year
Outside the UK and Ireland, sales at the company’s Brico Depot division in France fell 9.3 per cent after doubling in the previous year, while demand in the Iberian and Romanian markets also fell.
In Poland, however, sales soared by more than half, thanks to higher purchases of goods in weather-sensitive categories, growing market share and stores unaffected by intermittent closures.
Chief Executive Thierry Garnier said: “Although we faced very strong comparables last year, our continued strategic progress has enabled us to sustain a significant portion of the revenue growth during the pandemic.”
Since the start of the current quarter, revenue is up 21.8 per cent from pre-Covid levels, according to Kingfisher, as trade has “remained stable” and in line with forecasts across brands and segments.
As a result, the company still expects adjusted profit before tax of around £770m this fiscal year, a significant drop from the last 12 months but a larger amount than before the pandemic.
The company acknowledged the heightened economic and political uncertainty that has emerged since the start of the year, but claimed it has managed cost increases and supply chain issues “effectively” and that product availability is approaching pre-Covid volumes.
Russ Mold, Investment Director at AJ Bell said: “It has always been a difficult task for B&Q owner Kingfisher to live up to the extraordinary time of 2021 when it was one of the few stores able to operate and the People’s desire to renovate homes during lockdown has reached a peak.
“Distribution is proving more resilient than some feared. This suggests that despite the pressure on household budgets, there is still some catching up to do for home improvement.
“While inflationary pressures are a challenge for the company to contend with, it sounds like the supply chain issues that have plagued the DIY sector like so many others are at least beginning to ease.”
Downturn: As restrictions for the Covid-19 pandemic eased, Kingfisher’s share price began falling, falling by more than a third over the past year
Kingfisher unveils another £300m share buyback scheme
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