The results are broadly in line with forecasts, with management, unlike the chancellor, still cautious and hesitant in proclaiming an economic recovery. Weather volatility has played a major part, whilst divergence in consumer confidence across its geographical footprint continues to impact.
There is little of surprise from today’s Kingfisher update, with a weather-boosted second quarter in the UK combining with a broadly static French picture in delivering earnings stability. Following the recent re-rating, temporary UK mortgaging headwinds and volatile French demand may prove near term dampeners.
We upgrade our recommendation for Kingfisher to ‘hold’ as we believe the market is focused on the presumed impact to the DIY sector of a housing market led recovery and the potential for capital returns over the medium term. We remain concerned, however, that any DIY upturn in the UK will be more subdued.