The UK and France are reportedly experiencing economic challenges, prompting concerns about potential tax increases and spending cuts that could impact consumer confidence. This situation raises questions about the performance of retailers, particularly those in the home improvement sector that cater predominantly to these markets. For example, Kingfisher, which operates B&Q and Screwfix in the UK and Castorama and Brico Dépôt in France, was among the most heavily shorted stocks in the FTSE 100 index prior to its recent half-year financial release.
Contrary to expectations of weak trading, Kingfisher reported a 1.9% increase in like-for-like sales during its latest half-year, particularly noting strong performance in kitchen and bathroom sales in the UK. The company has also raised its full-year pre-tax profit forecast to the upper end of a previous range, and plans to accelerate a £300 million share buyback program. This positive performance led to a 15% increase in Kingfisher’s share price, suggesting that short-sellers may be covering their positions.
Several factors contribute to Kingfisher’s resilience. The DIY retail sector has unique seasonal advantages, and warmer weather can influence consumer purchasing decisions. Additionally, around 28% of Kingfisher’s business comes from trade customers, who tend to visit more frequently and spend more per trip. Insights from supermarket executives indicate a divide in consumer behavior; while some are reducing spending, many remain willing to spend, particularly on larger purchases. Stabilized housing transactions and improved mortgage affordability may also contribute to the performance in the DIY market.
Kingfisher appears to be effectively managed, with strong operations particularly in its Screwfix brand, which outperforms competitors. The company’s UK operations have benefited from new services and competitor challenges, while a restructuring plan is in place for its weaker French segment. Despite broader market concerns, Kingfisher demonstrates that not all businesses are equally affected by economic conditions. The question remains whether other retailers can achieve similar resilience amid the same economic pressures.
Source: https://www.theguardian.com/business/nils-pratley-on-finance/2025/sep/23/b-and-q-owner-defies-gloomsters-wasnt-unpredictable