- Kingfisher
- 08 May 2024 17:21:26
Source: Sharecast
The bank argued that a deterioration in the French outlook leaves Kingfisher - which also owns Castorama and Brico Depot in France - too reliant on UK strength.
"We remain of the view that cons FY 25 forecasts for both the UK and France are over ambitious (we sit circa 10% below cons on FY 25 profit before tax), particularly with the latter seeing signs of a weakening consumer," JPM said.
The bank pointed out that results from a September 2023 survey showed a "significant" worsening in the outlook for French DIY spend, with the net balance falling to -22% from only -1% in March.
It said that while longer mortgages in France provide some protection in a rising rates environment, housing starts and new mortgages have nevertheless materially deteriorated, now 29% and 43% below pre-pandemic levels.
JPM also said that recent profit warnings in France could signal a weakening consumer.
"In addition to KGF witnessing a slight slowdown in Aug/Sep, homewares retailer, Maisons du Monde, profit warned this month, referencing a ‘strongly deteriorating trend’.
"This followed a warning from clothing retailer, SMCP, in September, which had seen a deterioration since the end of July," JPM said.
JPMorgan has a 200p price target on Kingfisher.
At 1230 BST, the shares were down 1.6% at 200.80p.