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Kingfisher reveals another £300m share buyback scheme

Kingfisher reveals another £300m share buyback scheme as trading remains ‘resilient’ despite slowdown

  • Kingfisher’s first quarter LFL online sales are up 164% since 2019
  • Over the last two years, the DIY industry has benefited from an increase in business
  • A temporary stamp duty holiday in the UK also stimulated demand for DIY products.

Screwfix owner Kingfisher will soon start buying back a further £300m of its shares, less than a month after completing a buyback program of the same size.

Home improvement retailer FTSE 100 finalized a separate £300m share buyback scheme at the end of April when it returned £75m in excess capital to shareholders.

Over the past two years, the DIY industry has benefited from a surge in business as people spend more time at home and rack up additional savings when lockdown restrictions remain tight.

New scheme: Screwfix owner Kingfisher just ended a separate £300m share buyback scheme at the end of April when it returned £75m in excess capital to shareholders

New scheme: Screwfix owner Kingfisher just ended a separate £300m share buyback scheme at the end of April when it returned £75m in excess capital to shareholders

Demand has been further fueled by a growing desire among Britons to live in more spacious properties and a temporary stamp duty holiday introduced by the UK government in the summer of 2020.

As a result, Kingfisher’s total comparable revenue in the three months to the end of April rose 16.2%, compared with the equivalent period three years ago, to £3.2bn.

All of the company’s territories and brands have seen strong growth in business, but there has been a particularly strong expansion in online sales of 164 percent.

However, trading has started to fall as Covid-19 restrictions have eased, leading to Kingfisher’s share price plummeting by more than a third in the past 12 months.

But Kingfisher Actions rose 1.9 percent to 251.6 pence early Monday,

The London-based group, which also owns B&Q and French DIY chain Castorama, reported today that its total sales fell 5.8 percent compared to the same period last year.

In the British Isles, Kingfisher’s largest market, revenue fell 14.2% after rising by two-thirds in 2021, with B&Q seeing revenue drop 17.8% to just under £1bn and Screwfix sales fell 7.1% to £572m.

Weaker trading: Revenue at B&Q fell 17.8 per cent to just under £1bn in the first quarter after a previous strong comparative performance last year

Weaker trading: Revenue at B&Q fell 17.8 per cent to just under £1bn in the first quarter after a previous strong comparative performance last year

Outside the UK and Ireland, sales at the firm’s Brico Depot division in France fell 9.3 percent after doubling a year earlier, while demand in its Iberian and Romanian markets also fell.

However, revenue soared by more than half in Poland due to higher purchases of goods in weather-related categories, market share expansion and stores not affected by any temporary closures.

Chief Executive Officer Thierry Garnier said: “While we faced very strong comparisons in the previous year, our continued strategic progress has enabled us to retain a significant proportion of the increase in sales during the pandemic.”

Since the start of the current quarter, Kingfisher said revenue has grown 21.8 per cent on pre-Covid levels as trading has “remained resilient” and in line with forecasts across all brands and segments.

As a result, it still expects to post around £770m in adjusted pre-tax profit this financial year, a significant decline from the previous 12 months but a larger amount than it earned before the pandemic.

The company acknowledged the heightened economic and political uncertainty that has emerged since the year began, but said it was managing cost increases “effectively” and product availability was approaching pre-Covid volumes.

AJ Bell’s chief investment officer, Russ Mold, said: “It was always going to be a difficult task for Kingfisher, owner of B&Q, to match the extraordinary period of 2021 when it was one of the few stores that could operate, and the desire of the people remodeling their homes had been trapped during the lockdown reached a zenith.

“Sales are proving more resilient than some might have feared. This suggests that there is still some pent-up demand for home improvements despite pressures on family budgets.

“While inflationary pressures are a challenge for the company to manage, it appears that the supply chain problems that had been plaguing the DIY sector, like so many others, are at least beginning to abate.”

Recession: As Covid-19 pandemic restrictions were relaxed, Kingfisher's share price began to fall, plummeting by more than a third in the last year

Recession: As Covid-19 pandemic restrictions were relaxed, Kingfisher’s share price began to fall, plummeting by more than a third in the last year

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