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UK's Kingfisher positive on profit outlook after working from home boost

·2-min read
FILE PHOTO: Signs outside the B&Q and Screwfix stores in Loughborough

By James Davey

LONDON (Reuters) -British home improvement retailer Kingfisher on Friday forecast full-year profit towards the higher end of previous guidance, with demand supported by industry trends it believes will endure, including more working from home.

The group, which owns B&Q and Screwfix in the United Kingdom and Castorama and Brico Depot in France and other markets, had in September forecast 2021-22 adjusted pretax profit of 910-950 million pounds ($1.23-$1.28 billion), up from 786 million in 2020-21.

However, shares in Kingfisher were down 4.5% at 0849 GMT, paring 2021 gains to 19%, reflecting some disappointment over the absence of an outright profit upgrade and a lack of visibility on the outlook for the 2022-23 year.

Prior to Friday's update analysts' average forecast for 2021-22 profit was 952 million pounds, indicating they expected an upgrade.

On Friday it said like-for-like sales fell 2.4% in the three months to Oct. 31 against high numbers a year ago when it benefited from soaring demand during the COVID-19 pandemic.

But like-for-like sales on a two-year basis were up 15.0%.

Kingfisher also made a good start to its fourth quarter, with like-for-like sales to Nov. 13 up 0.4% year-on-year and up 13.2% on a two-year basis.

It said it saw strong third quarter growth across both retail and trade channels, and across all product categories, winning market share.

"Demand remains supported by what we believe are enduring new industry trends, including more working from home," said CEO Thierry Garnier.

British retailers are battling supply chain disruptions and labour shortages.

However, Garnier said that since the start of this year Kingfisher had maintained, and in many cases improved, its product availability.

"We have also continued to manage inflation pressures effectively, while retaining highly competitive pricing," he said.

Kingfisher forecast second-half like-for-like sales towards the higher end of its previously guided range of down 7% to 3% and up 9% to 13% on a two-year basis.

The pandemic has also boosted shopping online. Kingfisher highlighted third quarter e-commerce sales growth of 133% on a two-year basis, with online sales 16% of group sales.

($1 = 0.7410 pounds)

(Reporting by James Davey; editing by Guy Faulconbridge, Paul Sandle and Emelia Sithole-Matarise)

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