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A surge in Kingfisher‘s (LSE:KGF) share price this week means it’s catipulted itself into one of the FTSE 100‘s big winners so far in 2025.
At 289.1p per share, the DIY retailer soared 15% on Tuesday (23 September) after lifting its full-year forecasts. It’s now risen 17% in the year to date, beating the FTSE‘s broader 12% rise.
But with weak consumer sentiment persisting in its markets, can Kingfisher shares continue rising? And should I consider adding the retailer to my portfolio?
The numbers
Thanks to higher volumes and improved pricing — and more specifically, strength at its UK and Irish units — Kingfisher’s like-for-like sales rose 1.3% between February and July, it announced yesterday.
The retailer described trading in its core home market as “resilient,” reflecting the impact of favourable weather conditions, real wage growth and improvements in the housing market.
With margins also up, Kingfisher’s adjusted pre-tax profit rose 10.2% year on year to £368m. As a consequence, the retailer now expects to record profits at the “upper end” of its £480m-£540m forecast.
Adding an extra sweetener, Kingfisher tipped full-year free cash flow of £480m-£520m, up from a prior estimate of £420m-£480m. It consequently announced plans to complete its £300m share repurchase programme by March, ahead of previous plans.
Reasons for concern
There’s no doubting the impressiveness of Kingfisher’s numbers amid broader weakness in consumer spending.
Market share gains across the UK, France and Spain underline the strength of its brands like B&Q and Screwfix. Investment in the digital and trade channels are also paying off handsomely. Those first-half numbers also show the company’s got a tight grip on costs, resulting in a 100-basis-point rise in gross margins over the half year (to 37.7%).
But while the market has clearly been excited by this, Tuesday’s update also underlined some ongoing causes for concern. While UK and Irish like-for-like sales rose 3.9% over the period, these dropped 2.1% in France during February-July. They fell by the same percentage in Poland, reflecting in part rising political uncertainty on the continent.
It is also facing headwinds in the UK, noting that “we remain mindful of early signs of softness in the labour market, uncertainty ahead of the Autumn Budget, and rising inflation.” Cost pressures are another significant threat (operating costs spiked 7.5% in the first half).
Should I buy Kingfisher shares?
There’s no doubting the retailer’s excellent operational resilience in what remain difficult conditions. But the outlook remains highly uncertain, and I feel that isn’t reflected in Tuesday’s share price jump.
As an investor myself, I’m also mindful of the high premium Kingfisher shares now command. It’s forward price-to-earnings (P/E) ratio now sits at 15.5 times, some way above the FTSE 100’s broader average of 12.4 times. If trading does deteriorate as I fear, this could prompt a sharp share price correction.
On balance, then, Kingfisher shares still carry too much risk for my liking. I’d rather find other UK shares to buy for my portfolio.
