Kingfisher PLC IV – Opportunities (Let’s make lots of Money?)

Kingfisher PLC IV

Kingfisher PLC, the owner of B&Q and Screwfix, operates in multiple European countries, including the UK, France and Poland. Their stock is the third most shorted in the FTSE 100 with 6.8% of its equity share capital sold short by short sellers. 

This is the fourth and final blog in our series of blogs analysing Kingfisher PLC’s Earnings Call Q&A session for their full year results on 25th March 2025. 

Below is yet another invaluable question from the Earnings Call, this time asked by Geoff Lowery, Equity Research Analyst at Redburn (Europe) Ltd; 

"I was very struck by your chart about gross margin opportunities, and I think you used the word multiple opportunities. I appreciate the slide was with regards to 2025. But if we looked out over, say, three years, many of those drivers feel longer term in nature. Do they add up to tens of basis points or hundreds of basis points of opportunity?"

Bhavesh Mistry CFO, Kingfisher PLC responded as follows; 

"Why don't I give you a bit of colour on what we're doing?

"...Since there's a lot of initiatives that are already underway, we're not starting from zero. To give you a concrete example, we have an initiative we're calling buying for growth, which is taking what we know about our private label business and disaggregating the components of a particular product - commodities, energy, and what it costs to actually build that product. And that's giving us really good insight to go back to the branded products, in terms of how we're negotiating. Because there has been inflation over the last couple of years on some of our COGS. So, we're really getting bottom-up science. So, looking at product cost components to then push back and really get good negotiations done with suppliers. Marketplace has been growing rapidly. That's accretive. 

As you've seen, we rolled it out now to Poland, to France, and it continues to grow really quickly at B&Q. Retail media, we talked about trialling at Screwfix. These are all things that are underway that are additive and will push our margin forward next year and the year beyond."

Thierry Garnier, CEO, Kingfisher PLC added; 

"Just to say again, we are a bit cautious on sales trend. But we believe cost and margin is really in our control, and there are clear opportunities. We are more bullish on this."

This question seeks to gain more information on how significant the potential for gross margin improvement is – tens of basis points or hundreds. 

The CFO will not be drawn - and again avoids the question in favour of excessive non-relevant detail. Particularly of note is the change of language from the ‘opportunities,’ used in the question to ‘initiatives,’ in the answer. 

This implies an element of distancing from the outset. The CEO interjects and issues another warning on sales trends. To us, gross margin opportunities look like a hope rather than a firm belief. 

The CEO is only ‘bullish’ on what they ‘believe’ is ‘really’ in their control as opposed to simply, ‘what is in their control.’

There are no details that commits management to achieving an improvement as no targets are mentioned. 

Reference to written article: www.kingfisher.com/~/media/Files/K/Kingfisher-Plc/Universal/investors/result-reports-presentation/2025/20250325Kingfisher-PLC-Full-Year-2024-25-Results-Transcript.pdf 

All blog subjects are identified, validated and written by the DDL Team. See www.ddlltd.com for more on Deception Detection Lab Ltd.

Neither DDL nor its employees have any position in Kingfisher PLC. 

Photo Credit: Yahoo! Finance