Kingfisher, the parent company of Screwfix, B&Q and other retail chains, has warned of a £45m impact on the group’s retail profit for 2025/26 due to tax increases included in the UK and French governments' budgets.
The company also revised its full-year adjusted profit before tax (PBT) guidance range slightly downwards from between £510m and £550m to between £510m and £540m, reflecting its performance to date.
The group stated that the rise in UK employers' National Insurance contributions would result in an additional cost of £31m. In France, proposed adjustments to social taxes, along with the delay in eliminating a sales-based tax, are expected to add €37m in costs.
The announcements come as Kingfisher reported a 0.6% drop in sales to £3.22bn ($4.05bn) for the third quarter (Q3) of the fiscal year 2024/25 (FY24/25) compared to the same period in the previous fiscal year.
In the UK and Ireland, the group saw a sales increase of 1.2% reaching £1.61bn, bolstered by Screwfix's 4.6% growth during the quarter.
During the quarter ending 31 October 2024, Screwfix's like-for-like (LFL) sales rose by 1.8%, supported by strong demand from trade customers and growth in core categories such as tools and hardware, building and joinery, and outdoor products.
However, B&Q's sales in the region fell by 1.1%, with like-for-like sales decreasing by 0.6%.
Despite this, e-commerce and trade sales provided some support, along with an improvement in retail customer sales over the quarter.
In France, total sales declined by 4.2% in Q3 FY24/25, reflecting broader market trends. Both Castorama and Brico Dépôt experienced lower sales in October due to weak consumer sentiment and adverse weather conditions.
Castorama's sales dropped by 7.2% to £503m, while Brico Dépôt saw a decrease of 5.6% to £464m.
Poland and Iberia, however, saw reported sales increases of 6.6% and 4.1% respectively, while Romania faced a downturn with a 6.9% drop in Q3 FY24/25 sales.
Kingfisher CEO Thierry Garnier said: “Overall trading in the third quarter was resilient. Improved performance in August and September was offset by the impact of increased consumer uncertainty in the UK and France in October, related to government budgets in both countries.
“All our banners in the UK, France and Poland performed in line or ahead of their respective markets, with particularly strong market share gains at Screwfix. We continued to see improved volume trends in our core categories, supported by repairs, maintenance and existing home renovation. As expected, sales of our ‘big-ticket’ categories remained soft, although we are seeing early signs of improvement.”
The company also emphasised its commitment to cost control and expects to fully realise £120m in structural cost reductions for the year as planned.
The retailer remains on track to complete its current £300m share buyback programme by March 2025 and continues its commitment to returning surplus capital to shareholders.
In September 2024, Screwfix revealed plans to open up to 20 Screwfix City stores by the end of 2024.
