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DIY Britons keep Kingfisher afloat while France falters

We in the UK may be cutting back on DIY jobs, but it seems like we are rolling up our sleeves on more occasions than the French.

Analysts at Nomura think despite sales in the UK dropping, the domestic market is still offsetting decline across the Channel at retailer Kingfisher — owner of B&Q and France’s Castorama and Brico Dépôt.

Nomura’s Sunita Entwisle retained her “hold” rating on Kingfisher and said: “Market data suggests that DIY in the French market has weakened with consumer uncertainty following the new budget and a fall in housing starts given changes in buy-to-let incentive plans.”

But she thinks the UK has fared better and “with further cost savings and gross margin gains… estimates UK earnings of £61 million”.

Kingfisher will update the market with third-quarter results next week. The French market is looking ever weaker and Entwisle thinks that if the weak trade “drives further cost savings and self-help measures, we think there could be upside to our discounted cash flow valuation”.

She gave the stock a share price target of 287p. Kingfisher lost 3p to 276.15p.

Kingfisher will realise there are still no signs of a French recovery — last night credit rating agency Moody’s downgraded France’s triple A rating, blaming an uncertain fiscal outlook and deteriorating economy. It reduced its sovereign credit rating by one notch to AA1. The news comes as eurozone finance ministers attend a key meeting on Greek debt in Brussels.

Source : Laura Chesters – London Evening Standard

20 November 2012
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Thank you for the excellent presentation that you gave at Woodbury Park on Thursday morning. It was very interesting and thought-provoking for our Retail members. The feedback has been excellent.

Martin Elliott. Chief Executive - Home Hardware.

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