Analyst Note| Matthew Donen, CFA |
Demand for no-moat Kingfisher’s do-it-yourself products has been more resilient than management’s expectations despite the second sequential quarter of declining revenue, which is against an exceptionally high comparator. Management expects annual profit to fall in the higher end of its GBP 910 million to GBP 950 million guidance provided last quarter. While this will likely be marginally above our GBP 919 million estimate, our longer-term view remains unchanged. We expect consumer spending to shift away from home improvement and store expansion to moderate. We reiterate our GBX 353 fair value estimate and would require a greater margin of safety before initiating a position.