Here`s hoping that nothing overly negative in the update tomorrow. The market is being a little brutal to any under-performances at present and I could do with a break after Spire, Firstgroup and BT. all plummeted recently. I expect better news from France and Poland but I feel the pressure will come from home at B&Q and possibly Screwfix.
"Two-thirds of @GB:UKX:FTSE 100 constituents have posted year-to-date rises, but it's two of 2017's biggest blue-chip laggards that lead the @GB:ASX:FTSE All-Share Wednesday.By close of play yesterday, LSE:KGF:Kingfisher and LSE:BAB:Babcock were ..."
Today's statement does not justify the fall in today's price. This is not a business that is consistent quarter by quarter. For the last four years the company has achieved positive, but small, growth. The current price of 296p suggests negative growth so provides a buying opportunity,
"While the five-year rebuilding job at LSE:KGF:Kingfisher continues to progress, the same can't be said about current trading or the company's share price.Summer sales figures highlighted continued weaker trading in France, with the like-for-like ..."
"Analysts at Barclays initiated B&Q and Screwfix owner Kingfisher as 'underweight' as it expects macroeconomic headwinds in both Britain and France.
The bank said the FTSE 100 company is facing difficult macro and market share losses in France that are unlikely to be resolved quickly and so initiated an 'underweight' rating and a target of 300p.
Although it does believe that Kingfisher's five-year plan to turnaround its prospects "makes sense", but it could disrupt operations in the short - term and negatively impact its financial results.
During the first year of its turnaround plan Kingfisher unified 4% of its products across its different chains, but included what Barclays believes are "low hanging fruit", as the company is also planning to increase its unified ranges to 20%, which may result in "excessive inventory that will need to be discounted, potentially unwanted new items and a cultural clash with divisions that have been used to more autonomy".
Barclays believes that Kingfisher will find it difficult to grow sales over the next year as its French subsidiaries have experienced a continued decline in profitability since 212 when the gap between UK-based B&Q's sales and that of Brico Depot and Castorama peaked.
Despite trading slightly below its five-year average price-to-earnings ratio, Barclays said that its stock is already pricing in some improvements and that company-collected consensus is too high.
The biggest risk to Barclays' forecast is "faster than expected benefits from the current turnaround plan".
It said that it was possible that a "unified range" will be popular with consumers and simplify operations, but this is unlikely, while macro improvement in France and Britain could surprise the market on the upside."
"................. Veronique Laury, the chief executive of B&Q owner Kingfisher, appears to regard Bunnings with something approaching a Gallic shrug........
Since she took charge in December 2014, Kingfishers share price has gone nowhere fast. But she has convinced investors that the £7.5bn company is no small fixer-upper, unveiling a grand five-year plan, One Kingfisher, that will squeeze suppliers, close stores and boost profits by £500m by 2021 at a cost of £800m.
It is early days and investors have little to go on. A £600m share buyback is designed to keep the faith. Kingfisher reports back on year one of its turnaround alongside annual results on March 22, but analysts at Numis are sceptical the £500m of incremental profit will ever be delivered. HSBC warns that the next phase of Laurys revival will be more disruptive, affecting 20pc of Kingfishers UK retail space.
In the meantime, investors are focused on current trading, which is a tale of two countries. There is little growth in the French DIY market and Kingfisher, which trades there as Castorama and Brico Dépôt, tried and failed to buy a close competitor, Mr Bricolage. Like-for-like sales declined 3.6pc in the third quarter as it continues to lose market share.
The comparative third-quarter figure in the UK and Ireland, where the group derives a similar 40pc of sales, was a 5.8pc rise. It is being buoyed by Screwfix, which focuses on the building trade. Rising inflation and increasing consumer debt are worries on the horizon.
Rebuilding profitability is long overdue. The £720m or so pre-tax profits Kingfisher will report in March are roughly £100m shy of the surplus five years ago, off almost identical turnover. At least the balance sheet remains strong.
The shares have fallen 7pc since the November update. Kingfisher still trades on 14 times this years forecast earnings. The One Kingfisher plan comes with plenty of execution risk and the rewards require profit to soar in 2020 and 2021. Together with fresh competitive pressures, there is better value and more sizzle elsewhere.
Update on Kingfisher from AlphaValue (taken from Research Tree):
"Kingfisher released a Q2 FY16 trading update ahead of our estimates as well as market consensus. The lfl revenue increased by 3% (vs Q1 16: +3.6%, Q4 15: +2.8%; our estimate: +1.5%), once again driven by the strong performance in the UK & Ireland (Q2 16: +7.2% vs our estimate: +1.8%). B&Q clocked lfl growth of 5.6% (vs our estimate: +2.5%) on the back of strong demand of both seasonal (+9.6% yoy) and non-seasonal products (+3.4%; includes showroom). Likewise, Screwfix continued the resilient performance with +13.3% lfl, led by its Omni channel capability, roll-out of new / extended ranges and new outlets. Among international markets, Poland (Q2 16: +7.3%, Q1 16: +10.8%; our estimate: +2.5%) continued to benefit from supportive market conditions, new ranges and strong growth from seasonal and non-seasonal products. France was down 3.2% on a lfl basis (vs Q1 16: +0.2%, Q4 15: -1.0%; our estimate..."
B&Q owner Kingfisher (KGF) is reliant on UK sales, which Brexit could place under pressure.
Haitong Research analyst Tony Shiret retained his sell recommendation and fair value price of 275p on the shares, which rose 1.8% to 364.3p yesterday.
In terms of the longer term shape of the Kingfisher story, the company has been stuck in a pattern of flat to weak French sales and stronger UK performance boosted by the more trade-based elements, especially Screwfix, for some time now, he said.
Given Brexit implications for discretionary demand, we would regard greater reliance on UK performance as a vulnerability.
Kingfisher benefited from its currency mix to the point of the Brexit vote and has behaved similarly to other UK non-food retail majors more recently. It retains a decent but not huge premium to the valuation of large comparators like Next and M&S."
Read AlphaValue's note on KINGFISHER, out this morning, by visiting https://www.research-tree.com/company/GB0033195214
"Kingfisher released Q4 and FY15/16 results broadly in line with our estimates and slightly ahead of market consensus. In Q4, lfl revenue increased by 2.8% (vs 2.6% in Q3 and 2% in H1); Screwfix (+15.1% vs. +13.3% in Q3, 16.5% in H1) led the pack with strong digital and mobile growth, and the roll-out of new and extended product ranges. B&Q clocked 4.4% growth (vs. +2.4% in Q3 vs 0.7% in H1) on the back of stronger demand of indoor products (excluding showrooms: kitchen and bathroom). However, the sluggishness in the French home improvement market and subdued house building activity ..."
"Kingfisher has been given a 'reduce' rating by Numis after the company's recent full year results.
Numis said it was yet to be convinced that the home improvement retailer's transformation plan will successfully address the group's low return on capital employed or develop new growth channels. The broker reiterated its target of 325p, which compares to the share price of 378p at 1123 BST on Monday.
"Meanwhile, the liquidity profile is less compelling," said Numis analyst Matthew Taylor.
"We view the valuation as challenging on 16.6 times price-earnings ratio/ 4% free cash flow yield to full year 2016."
The company, which owns B&Q and Screwfix, last month reported a 0.3% increase in adjusted pre-tax profit to £686m despite a 2.6% drop in adjusted sales to £10.3bn due to foreign exchange headwinds.
Kingfisher said its five-year turnaround plan, announced in January, was on track but warned that profits would be hit in the first two years with a total expected cash cost of £800m. The company expects the plan to deliver a £500m sustainable annual profit uplift by end of year five.
"We remain sceptical that the strategy will eventually achieve £500m per annum of incremental profit and view the implementation costs, notably the £800m cash impairment, as significant," Taylor said.
However, the analyst said the 2016 full year results slightly beat estimates and Numis has raised its 2017 forecast by 4% due to a more favourable currency backdrop.
The underlying trading picture was said to be "solid enough", while the shares have benefited from the recent weakness in sterling with the 10% fall equivalent to a "circa 5%" upgrade."
"There are big changes afoot at LSE:KGF:Kingfisher. It will shut 15% of its B&Q DIY stores this year, slash costs and roll out a better IT system. If everything goes to plan, annual profit should increase by an incredible Â£500 million in five ..."
"LSE:KGF:Kingfisher shares remain trapped in a narrow trading range following an uninspiring set of half-year results. The weak euro put a big dent in profits at the B&Q owner and the outlook for France is unconvincing. It also looks increasingly ..."
"Against weak comparatives, B&Q owner LSE:KGF:Kingfisher has inspired investors with a decent set of second-quarter numbers. There's been growth across the board over the three months, but more focus will need to turn to developing the core ..."
"Morgan Stanley downgraded Kingfisher to 'underweight' from 'equalweight' but raised the price target to 310p from 300p.
It noted that since it upgraded the stock in December, Kingfisher has exited China at a price below asset value, seen its proposed acquisition of Mr Bricolage fall through and experienced significant adverse currency movements.
The bank said the company's new strategy to create a unified business by selling the same products across Europe presented in the same way is high risk.
"Whilst we accept that this strategy could deliver very material cost savings, we think that it may negatively impact sales, potentially very significantly," it said."
I tend to agree ct. I like the strategy and how they are going about implementation.
Reducing the number of B & Q stores is a no brainer. You can lose a morning just trying to find your way out of my local store it's so big and not see a soul for 30 minutes! That said, the staff provide exceptional customer service and are always on hand.
Strangely, I can never get near the door of the Screw fix branch, or park as it's always packed in the day with white van man everywhere. It's also the size of a matchbox. I do wonder what would happen if we switched the signs of the B & Q and Screwfix overnight. Maybe that would solve capacity problems on both sides :-)
From CEx report - 'We can achieve significant benefits from developing a more common, unique and effective offer. It is becoming increasingly clear that customer needs are already largely the same, that the markets we serve are fundamentally more similar than different, and that there are few known manufacturer brands across the sector.' !!!!!!!!!!!!!!!!!!!!
The published strategy seems mostly sound but to conclude that europeans from Ireland across to Poland and Romania have the 'same needs' does not seem to reflect other retailers e.g M&S, Tesco, Ford, Next and the demise of C&A etc. let alone major culture differences, immigration concerns, UKIP, France's problems and so on.
This new strategy is also flying in the face of the failing Euro and Greece problems! We are not the same and don't want to be.
Similaries yes but to base a new expensive reorganisation on a strategy that has failed time and again seems a huge gamble. British houses and regulations separate us from otehrs who also have their own styles and cultures which need to be acknowledged and won't change just because one retailer wants it.
Taking on ex IKEA managers won't jus make Kingfisher the next IKEA with its decades of development.
Credit Suisse Raises Kingfisher plc Price Target to GBX 400 (KGF)
March 3rd, 2015 Updated March 5th, 2015
Equities researchers at Credit Suisse upped their target price on shares of Kingfisher plc (LON:KGF) from GBX 360 ($5.55) to GBX 400 ($6.16) in a research report issued on Tuesday. The firm currently has an outperform rating on the stock. Credit Suisses price target points to a potential upside of 8.20% from the stocks previous close.
Shares of Kingfisher plc (LON:KGF) opened at 364.20 on Tuesday. Kingfisher plc has a 52 week low of GBX 283.00 and a 52 week high of GBX 512.00. The stocks 50-day moving average is GBX 340.8 and its 200-day moving average is GBX 317.5. The companys market cap is £8.610 billion.
A number of other analysts have also recently weighed in on KGF. Analysts at AlphaValue reiterated a buy rating and set a GBX 397 ($6.12) price target on shares of Kingfisher plc in a research note on Friday. Analysts at Espirito Santo Investment Bank Research reiterated a sell rating and set a GBX 270 ($4.16) price target on shares of Kingfisher plc in a research note on Wednesday, February 25th. Analysts at Barclays downgraded shares of Kingfisher plc to an underweight rating and lowered their price target for the stock from GBX 285 ($4.39) to GBX 270 ($4.16) in a research note on Friday, February 20th. Finally, analysts at Bank of America raised their price target on shares of Kingfisher plc from GBX 290 ($4.47) to GBX 300 ($4.62) and gave the company an underperform rating in a research note on Friday, February 20th. Six equities research analysts have rated the stock with a sell rating, eleven have issued a hold rating and three have assigned a buy rating to the companys stock. The stock currently has a consensus rating of Hold and an average price target of GBX 318.10 ($4.90).
Kingfisher plc is a home improvement retailer. The Company, through its subsidiaries, joint ventures and associates supply home improvement products and services through a network of retail stores and other channels, located in the United Kingdom, continental Europe and China. The Companys geographic segments are France, United Kingdom and Ireland and Other International.
"The FTSE still needs visit 6326 to undo the opening second damage from Monday. The market had one of these fruitcake afternoons where we got excited by a 3 point movement but the FTSE need now only better 6441 points to foul up our calculation ..."
Well, if it wasn't for outstanding results at B&Q in the first Quarter, we would be reading about losses instead! :-/ Regardless, the results aren't too bad. Increasingly reducing the dependency on France going forward and expanding in new growth markets is the best use of the cash - I'm never a great believer in share buybacks.
It's a shame about China, undoubtedly the first market you would suggest for growth yet, big losses there with the cooling house market. If the next results are to do exceptionally well, France must return to growth - that's not going to happen in the short-term..!
A buy for me though, fundamentally very sound, once Europe stabilises, Kingfisher will prosper quite a bit.
I don't think they'll be "exceptional", they've got some difficult market forces to deal with at the moment. Yes, they may have done well in the UK this month (Housing market is doing great) although some research shows France reported a continual sharp drop in retail purchasing still.. they may have done very well in other countries though.
"The Questor Column:
Avoid Kingfisher falls as sales slump:
B&Q Owner Kingfisher is stuck in a Catch-22 situation. If it cuts prices to drive sales then profits fall and if it holds prices to protect earnings then turnover drops. Questor thinks its shares, which were down more than 8%, may have further to fall. The largest DIY retailer in Europe reported group like-for-like sales down 1.8% during the second quarter. Kingfisher blamed weaker than expected sales in France and Poland, and while this certainly wont have helped, there are worrying signs of weak consumer demand during its crucial summer selling season. In the first quarter the company missed market expectations for profit because of discounting activity to shift stock from the previous year. Retail profit increased by 20.3% on a constant currency basis to £142 million in the three months ended May 3, but the market was expecting something more in the region of £150 million. Gross margins were down around 200 basis points throughout the first quarter and Kingfisher said this was due to discounts on kitchens, bedrooms and bathrooms along with rising delivery costs and selling some lower margin building and garden products. Market expectations are for revenue to increase by 2.5% to £11.4 billion, and pretax profits to rise 3% to £782 million. However, that full year profit performance could be under threat if demand remains weak. So the shares, trading on 13.7 times forecast earnings, look exposed to further weakness going into the second half.
"Admittedly, comparisons with last year were tough for LSE:KGF:Kingfisher and the DIY retailer always expected a difficult ten weeks to 12 July. The numbers were, indeed, bad, and the shares price now sits at a 15-month low. Management must act ..."
U.K. investors are proving to be an increasingly demanding bunch. B&Q Owner Kingfisher can be excused for feeling a little exasperated when, after reporting a sharp increase in profits and detailing a big return of cash to shareholders, investors still turned up their noses and sent the shares almost 5% lower. The DIY market is showing encouraging signs of growth. Constant currency sales during the quarter were 9.2% higher at £2.78 billion, though reported growth was limited to just 6.1% as foreign exchange movements pulled sales in France slightly lower. The tale at Kingfisher is illustrative of the wider market, namely that there are indeed signs of a genuine recovery in spending and sales growth. However, the stock market has got a little bit ahead of itself in terms of how strong it expects that recovery to be. The other worrying sign for investors was the falling gross profit margin. The City estimates that gross profit margins slipped by 200 basis points by the end of the first quarter. Questor thinks that could be a sign that sales growth is becoming harder to come by and Kingfisher is resorting to bigger discounts and special offers to tempt shoppers.
Market expectations are for revenue to increase by 3.4% to £11.5 billion, and pretax profits to rise 6.5% to £808 million. The company said it will return £100 million by way of a 4.2p special dividend, going ex-dividend June 25 and payable on July 25.
However, the shares, trading on 17 times forecast earnings, are no better than a hold. Kingfisher at 397p-20.3. Questor says Hold. "
"Home retailer LSE:KGF:Kingfisher was the biggest faller on the FTSE 100 on Thursday after it reported lower-than-expected first-quarter group sales and retail profit growth.The stock had fallen by nearly 5% in late morning trading to 397.7p, with ..."
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