European home improvement retailer Kingfisher has warned of a £45m hit to 2025/26 profit from tax raising measures in government budgets in both the UK and France, sending its shares sharply lower.
The group owns B&Q and Screwfix in Ireland and the UK and Castorama and Brico Depot in France.
It also lowered the top end of its guidance for annual profit in the current 2024/25 year as it reported a 1.1% fall in third quarter underlying sales, reflecting a weak market and consumer in both countries in October.
Shares in Kingfisher were down 12% in early trading in London.
The group said an increase in UK employers’ National Insurance Contributions would cost it about £31m, while in France proposed changes to social taxes and the postponement of the abolition of a sales-based tax would cost it about £14m.
“We are developing a range of additional mitigations, but at this stage expect to offset only part of this impact,” it said.
As regards a 6.7% increase in Britain’s minimum wage, also announced in the budget, Kingfisher said it expected to offset the impact through structural cost reductions and productivity gains.
Last week, dozens of UK retailers, including Tesco and Sainsbury’s, warned the budget will make both higher prices and job losses a certainty and dent investment.
Kingfisher said trading in August and September improved but was impacted in October by uncertainty related to the budgets.
It said all of its businesses reported sales in line or ahead of the market but noted sales of big-ticket, more discretionary, items continued to be weak, though it did see early signs of improvement.
Kingfisher now expects full year 2024/25 adjusted profit before tax in the range of £510-540m compared to its previous guidance of £510-550m and the £568m made in 2023/24.
The group said trading had improved in the fourth quarter, with like-for-like sales down 0.5% in the three weeks to November 23.