By Geoffrey Smith
Investir.com — Kingfisher (LON:) Shares rose mid-morning in London on Monday after the home improvement group delivered a strong first quarter of its financial year, helping to ease concerns that the end of the pandemic and soaring prices are hurting to the sector.
The owner of B&Q, Screwfix and French Castorama announced an additional 300 million pounds ($378 million) in share buybacks and reiterated its guidance for the year to January 2023, after saying sales up to in April were up 16% from pre-pandemic levels.
“Demand remains resilient and trade across all banners and across all customer segments (…) is in line with our expectations,” the company said.
As of 05:25 ET (09:25 GMT), Kingfisher stock was up 2.2%, making it one of the best performers in the market. However, it is still down 25% this year, caught in the global market downturn and hit by the pressure of higher taxes and energy prices on consumers in its main market, the UK.
There was clear evidence that the extraordinary increase in business caused by the pandemic was fading. Comparable sales were down 5.4% from a year earlier and were down around 16% in the UK and Ireland, where the group generates half of its business. The company made significant gains in market share in France, even though sales at Brico Dépôt and Castorama fell by 3.7%. This decline was also offset by its other European businesses, where they grew by 37%, thanks to a gain of more than 50% in Poland.
Kingfisher said its “good momentum” has continued so far in the current quarter. In the first half of May, comparable sales were down just 2.5% from last year’s exceptional levels, and 1 percentage point of that decline was due to Easter timing.
The group also decided to reassure investors on two key points that have caused widespread concern during the current earnings season, saying that it “continues to manage inflationary pressures well” and that it has “a good product availability”.
The Kingfisher news struck an optimistic note which contrasted with the earnings of many US retailers last week, although in the US as well, home improvement stores such as Home deposit (NYSE:) and Lowe’s (NYSE:) fared better than other specialty and department store names.