Kingfisher reveals another £300m share buyback scheme

Screwfix owner Kingfisher will soon begin repurchasing another £300million of its shares, less than a month after completing a buyback programme of the same size.

The FTSE 100 home improvement retailer finished a separate £300million share buyback scheme in late April when it returned £75million in surplus capital to shareholders.

For the last two years, the DIY industry has benefited from a surge in business as people have spent more time at home and accumulated extra savings when lockdown restrictions remained tight.

New scheme: Screwfix owner Kingfisher only just finished a separate £300million share buyback scheme in late April when it returned £75million in surplus capital to shareholders

Demand has been further spurred 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 like-for-like revenues in the three months to the end of April have climbed by 16.2 per cent, when measured against the equivalent period three years ago, to £3.2billion. 

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

Yet trade has started to slide as Covid-19 restrictions have loosened, leading to Kingfisher’s share price plummeting by over a third in the past 12 months.

But Kingfisher shares were up 1.9 per cent to 251.6p during the late morning on Monday,

The London-based group, which also owns B&Q and French DIY chain Castorama, reported today that its overall sales fell by 5.8 per cent compared to the same time last year.

In the British Isles, Kingfisher’s biggest market, revenues slumped 14.2 per cent after climbing by two-thirds in 2021, with B&Q seeing revenues tumble 17.8 per cent to just below £1billion and Screwfix sales falling by 7.1 per cent to £572million.

Weaker Trade: Revenues at B&Q tumbled by 17.8 per cent to just below £1billion in the first quarter following a strong prior comparative performance last year

Outside of the UK and Ireland, sales in the firm’s Brico Depot division in France declined by 9.3 per cent after doubling in the previous year, while demand in its Iberian and Romanian markets also dropped.

However, revenues shot up by over half in Poland due to higher purchases of goods in weather-related categories, expanding market share, and stores not being affected by any interim closures.

Chief executive Thierry Garnier said: ‘While facing very strong comparatives in the prior year, our continued strategic progress has enabled us to retain a significant proportion of the increased sales during the pandemic.’

Since the start of the current quarter, Kingfisher said revenues have grown by 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 £770million in adjusted pre-tax profits this financial year, a significant decline from the previous 12 months but a larger amount than it earned prior to the pandemic. 

The company acknowledged the heightened economic and political uncertainty that has emerged since the year began, yet it claimed it was managing cost increases ‘effectively’ and had product availability approaching pre-Covid volumes.

AJ Bell investment director Russ Mould said: ‘It was always going to be a tough ask for B&Q-owner Kingfisher to match the extraordinary period in 2021 when it was one of the few shops able to operate, and people’s desire to do up homes they had been stuck in during lockdown reached a zenith.

‘Sales are proving more resilient than some might have feared. This suggests there is still some pent-up demand for home improvement despite the pressures on household budgets.

‘While inflationary pressures are a challenge which the company is having to manage, it sounds like the supply chain problems which had been dogging the DIY sector, like so many others, is at least starting to ease.’

Downturn: As Covid-19 pandemic restrictions have loosened, Kingfisher’s share price has started to slide, plummeting by over a third in the past year

This post first appeared on Dailymail.co.uk