Kingfisher shares sink after Screwfix owner warned £45m budget would hit profits

kingfisher actions slumped on Monday after the retailer warned of a possible £45m hit to its profits if recently revealed budget announcements go ahead.

The owner of Screwfix believes the upcoming increase in employers’ National Insurance contributions will cost around £31 million in profits for the 2025/26 financial year.

It foresees an additional impact of £14 million if France’s proposed changes to social taxes and the delay in abolishing the sales-based CVAE are ratified.

Kingfisher has also cut its profit outlook for the current financial year as it suggested the UK and French governments’ plans had weakened consumer confidence last month.

The London-based company now anticipates its adjusted pre-tax profits will amount to around £510 million to £540 million, having previously expected them to reach £550 million.

Following this announcement, its shares plunged 13.4 per cent to 255.3 pence in the early afternoon, making it by far the biggest faller on the FTSE 100 index.

Kingfisher sales have stagnated over the past two years as higher interest rates have hit demand.

This followed a Covid-induced business boom caused by a stamp duty holiday, the rise of working from home and a growing desire among Britons to own larger properties.

In the three months ending October 31, Kingfisher’s turnover fell 0.6 per cent to £3.2bn, partly due to lower revenue in France.

Sales at Brico Dépôt fell 3.3 per cent to £464m, while they fell 4.9 per cent to £503m at Castorama amid subdued demand for high-priced items.

Trading has remained weak since early November, but Kingfisher said its like-for-like sales were down just 0.5 percent year-on-year.

Thierry Garnier, CEO of Kingfisher, commented: ‘Looking ahead to next year, recent political and macroeconomic developments have added further uncertainty to the near-term outlook for our markets.

“And that’s why we continue to focus our energy on what we can control: achieving greater market share gains through our key strategic priorities and managing our retail prices, costs and cash effectively.”

Many leading British retailers have warned that scheduled changes to NI rates, along with the rise in the national living wage, will not only hit profits but also lead to price rises and job cuts.

According to analysis by Morgan Stanley, supermarkets Sainsbury’s, Morrisons and Asda face a combined £1.3bn in extra NI bills over the course of this parliament, while Tesco could pay an extra £1bn.

Russ Mould, chief investment officer at AJ Bell, said Kingfisher “faces significant headwinds due to several tax changes, and there is much that can be offset by finding new cost efficiencies”.

“Businesses have spent the last few years focusing on operational improvements, and it’s difficult to keep finding new ways to save money without cutting too much and damaging service levels.”