DAVY VIEW

Kingfisher’s fiscal Q3 update indicates that the group continues to grapple with unhelpful end-markets as well as the deep-rooted structural challenges facing the DIY industry. Worryingly, Q3 like-for-like revenues fell far more than expected, down 3.7% versus an expected decline of 1-1.5%. France in particular performed very poorly and continues to underperform. During the quarter Kingfisher implemented a number of management changes, notably the arrival of Thierry Garnier as CEO. Trading patterns highlight the massive job for the new management team. Evidence of this is a likely 4-5% cut to full year underlying pre-tax profit forecasts following the update.