Kingfisher is On Track for Growth say Analysts

Home improvement giant Kingfisher posted positive fourth quarter results, and analysts say the existing strategy should help deliver low single digit margin expansion

Philip Gorham 24 March, 2016 | 2:32PM

Kingfisher (KGF) reported fiscal 2015/16 results that exactly matched our forecasts on the top line and were ahead of our expectations at the EBIT margin. We are reiterating our £4.30 fair value estimate for the ordinary shares and our narrow economic moat rating, as defences against online competition remain stronger in home improvement retail than in most other retail categories. The fourth-quarter earnings beat gives us higher conviction in our thesis that Kingfisher’s strategy to rationalise its merchandise range should help deliver low single digit margin expansion.

Where Kingfisher offers high-ticket private label products its pricing power is strong

Adjusted constant currency sales growth of 3.8% was consistent with our forecast, with the U.K. and Ireland segment delivering healthy like-for-like sales growth of 4.4%, driven by Screwfix. France remains the drag, with like-for-like sales down 0.4%, and management’s commentary on the French market gave little cause for optimism.

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Philip Gorham  

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