Earnings season: this week Kingfisher and Mark & Spencer report their results
Aa
Share
Kingfisher Q1 24 – 24/05 – when B&Q owner Kingfisher reported its full year numbers in March the shares initially opened higher, however the gains quickly disappeared with the shares giving up almost all of its gains this year.
Since those April lows, the shares have trod water over concern about the outlook. In its full year numbers profits saw a decline of 39% to £611m, while revenues also declined modestly to £13.08bn. The fall was driven by higher costs and discounting which ate into margins, which fell to 36.7%, a decline of 70bps. In Q4 total group like-for-like sales came in flat, indicating a more cautious consumer, however in the Q1 numbers so far there has been evidence of a pick-up with modest gains of 0.5%. The statement showed that profits declined across all their businesses, with UK and Ireland seeing a 24% drop in reported profits with quarterly sales seeing notable drops on an annual basis, although the Screwfix business did see a pickup in sales of 4.9% during Q4, unlike B&Q which saw sales decline every quarter. On the outlook for 2023/2024, Kingfisher said Q1 had got off to a good start across all its regions, although the French business was being impacted by strike action, while the poor weather in March, along with strike action here in the UK could have slowed the sales numbers after a string start to the quarter. Consensus forecasts for Q1 are for revenues to come in at £3.3bn, with same store sales in the UK and Ireland expected to decline by 2%, with B&Q forecast to see a 4.25% fall.
Marks & Spencer FY 23 – 24/05 – it's been a tough 12 months for the M&S share price, the shares are well below the peaks we saw early last year as markets cheered a business that has finally managed to execute a solid turnaround plan, with both food and general merchandise performing well.
Since the October lows of 91.70p the shares appear to be on course to recover 50% of the losses seen since the 2022 peaks. At the start of this year the company reported Q3 numbers that were broadly better than expected despite tough trading conditions. Total food sales rose 10.2%, while on a like for like basis they rose 6.3%, as its food business grew its share of the grocery market, and looks set to continue to do so, with plans to open 20 new shops this year and refurbish a lot of their existing stores. 12 of these new shops will be food halls with wider aisles and are expected to open next year. More importantly clothing sales also saw decent growth of 8.8%, and 8.6% on a like for like basis, and according to management achieved over 10% market share during the period, the best level since 2015. Total group sales came in at £3.6bn, a rise of 9.9%. Click and collect orders saw a big increase of 20% helped in some part by the Royal Mail strikes as customers collected their own parcels. Despite the strong Q3 performance management maintained their full year guidance perhaps mindful that Q4 could see a slowdown after a strong Q3. Full year revenue is expected to come in at £11.78bn, up from £10.9bn last year, although profits are expected to be lower due to higher costs.
