Business
Kingfisher Screws Its Profit Guidance Higher
THE GIST
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Kingfisher’s broader DIY markets are hardly booming, but Screwfix is doing enough heavy lifting to make the group look considerably healthier. Strong trade demand, better margins and tighter cost control pushed first-half profits higher and gave management the confidence to raise guidance despite a still-mixed consumer backdrop.
WHAT HAPPENED
Kingfisher shares jumped around 9% after the home-improvement retailer upgraded its full-year outlook following a stronger-than-expected first half.
Adjusted pretax profit rose 9.9% to £404 million (about $539 million) in the six months to July, while statutory sales increased 0.8% to £6.86 billion and underlying like-for-like sales edged 0.3% higher.
The standout performer was Screwfix, where like-for-like sales climbed 5.6% as stronger volumes, higher spending from trade customers and continued market-share gains offset softer consumer demand elsewhere in the group.
Trade customers now account for 74% of Screwfix sales, giving the chain greater exposure to professional builders, plumbers and electricians whose purchasing tends to be more frequent and less discretionary than that of ordinary DIY shoppers.
Digital engagement is also becoming increasingly important. E-commerce penetration at Screwfix reached 60%, while app sales increased 18%, helped by stronger loyalty-program usage and a broader range of branded products.
Kingfisher’s wider digital strategy continued gaining ground too. Group e-commerce sales excluding Screwfix rose 16%, while marketplace gross merchandise value jumped 42% to £372 million and contributed £13.4 million of profit.
Profitability improved faster than sales, with gross margin expanding 70 basis points due to sourcing gains, marketplace growth and disciplined cost management. A £14 million UK business-rates refund also helped the first-half result.
Management now expects adjusted pretax profit of £595 million to £635 million for the full year, up from its previous £565 million to £625 million range. Free-cash-flow guidance was also increased to £480 million to £520 million from £450 million to £510 million.
The stronger outlook comes even though trading remains uneven across the portfolio, particularly in France, where weak consumer confidence and softer demand for larger renovation projects continue to weigh on performance.
WHY IT MATTERS
Kingfisher’s results show why exposure to professional tradespeople can be particularly useful when ordinary consumers are nervous about spending.
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Large discretionary projects such as bathrooms, kitchens and major decorating work remain softer in several markets because households are still dealing with expensive borrowing, higher energy bills and generally cautious sentiment.
A plumber replacing a boiler or an electrician finishing a contracted job has less flexibility to postpone buying tools and materials, which gives Screwfix a more dependable demand profile than much of traditional DIY retail.
That distinction is becoming increasingly valuable for Kingfisher because Screwfix is no longer just another banner inside the group. It is becoming one of the main engines behind customer growth, digital adoption, market-share gains and earnings resilience.
The same logic explains why Kingfisher has been pushing harder into trade customers across B&Q and its European businesses. Trade sales excluding Screwfix grew 16% in the half, lifting group trade penetration to 31%, and management sees professional customers as a way to generate more frequent and predictable purchases.
Margins are improving at the same time, which makes even modest sales growth more valuable. Group revenue barely moved, yet adjusted pretax profit increased almost 10%, demonstrating how sourcing improvements, marketplace income and cost discipline can amplify relatively small top-line gains.
The marketplace model adds another attractive layer because Kingfisher can increase product availability without carrying all of that inventory itself. If third-party sellers can broaden assortment while Kingfisher collects commissions and service income, digital growth becomes less dependent on adding more stock and warehouse capacity.
The weak point remains France, where Brico Dépôt has been hit by softer project spending while Castorama has produced less exciting growth. B&Q also continues to see pressure in some larger-ticket categories, making Screwfix’s performance particularly important to the upgraded group outlook.
WHAT’S NEXT
The main question is whether Screwfix can maintain mid-single-digit growth once comparisons become tougher, particularly if construction activity and consumer confidence remain uneven.
Investors will also watch whether Kingfisher can keep converting marketplace and e-commerce growth into higher profits rather than simply generating additional digital volume. Marketplace GMV is already growing much faster than group sales, suggesting more of the range can expand without Kingfisher owning the inventory itself.
France remains the biggest operational challenge, and any sustained recovery there would make the group less dependent on Screwfix and UK trade demand for earnings growth.
Leadership will become another focus as chief executive Thierry Garnier prepares to leave for Ahold Delhaize. His successor inherits a business where the overall DIY market remains difficult, but Screwfix, trade sales, digital channels and better margins are providing enough momentum to keep the profit outlook moving in the right direction.
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