Barclays upgraded Kingfisher Plc to "equal weight" from "underweight" on Monday, while lowering its price target to 300p from 330p. The new target sits 2.4% above Kingfisher's April 24 closing price of 293p, after the home improvement retailer's shares delivered a total shareholder return decline of 21% since late February versus an 8% drop in the SXRP index.
The broker cut its earnings-per-share forecasts by 4-6%, placing its FY26/27 pre-tax profit estimate at £580 million. That figure sits at the lower end of Kingfisher's own guidance range of £565-625 million issued in late March. Barclays' pre-tax estimate is also 2-3% below the Bloomberg consensus of £587 million, according to the research note.
Barclays' adjusted diluted EPS projections are 25.2p for FY27, 28.2p for FY28 and 31.5p for FY29. The research team noted the stock trades at a January 2027 price-to-earnings multiple of roughly 11.5x, compared with a recent blended one-year forward PE of about 12x, per Barclays Research.
On why the broker stopped short of an overweight recommendation, Barclays said: "Visibility on near-term demand is very limited given heightened geopolitical uncertainty and building inflationary pressure." That caution accompanied the downgrade in near-term earnings and the lowered price target.
Marketplace and trade performance
Kingfisher's marketplace activity underpinned group gross merchandise value (GMV), which rose to £518 million in FY25/26, up 58% year-on-year. Barclays' analysis shows that B&Q contributed around £15 million in retail profit from its marketplace presence, while Castorama France and Iberia reached break-even.
Running costs for B&Q's marketplace are approximately £40 million, and Barclays estimated a drop-through rate of roughly 25% from commission income to retail profit. The broker quantified the contribution of marketplace growth as adding 18 basis points to group gross margin expansion of 83 basis points in FY25/26. Inventory on third-party platforms differs across banners: Barclays Research reported B&Q listing 3.7 million third-party SKUs versus 1.6 million at Castorama France.
Trade penetration continues to grow as a share of group sales. For FY25/26, trade accounted for 30% of group sales, equivalent to £3.9 billion including Screwfix, a level up 3 percentage points year-on-year. Excluding Screwfix, where trade penetration is 75%, trade sales rose 23% to £1.8 billion.
Geographic differences were notable: Castorama Poland led the acceleration in trade penetration with a 9-percentage-point increase to 27%, while Castorama France reached 4% penetration. The company has set a medium-term target of £5 billion in trade sales, roughly 30% above FY25/26 levels, according to company data cited by Barclays.
Store productivity and margins
On store-level productivity, Brico Dépôt Iberia is the group's strongest performer, with store sales densities about 30% above pre-pandemic levels. B&Q's sales density is reported to be 14% above pre-COVID levels. By contrast, Brico Dépôt France and Castorama Poland remain below pre-pandemic store sales densities, down 8% and 6% respectively versus FY19-20, per Barclays Research.
Poland showed the steepest deterioration in retail profit margins within the group, with margins down 5.6 percentage points from pre-pandemic levels.
Long-term incentive thresholds and cash flow
Barclays' FY28/29 EPS forecast of 32p sits slightly above the midpoint of Kingfisher's Long-Term Incentive Plan threshold and stretch targets under the 2026 Performance Share Award. The LTI plan specifies a threshold of 26p and a stretch target of 36p. Barclays' free cash flow projection of £1.45 billion also compares to a cumulative free cash flow threshold of £1.19 billion cited in company disclosures and Barclays Research.
Near-term outlook and calendar
The next company event on the calendar is Kingfisher's first-quarter FY26-27 trading update on May 26. Barclays expects group like-for-like sales to fall 1% for the quarter, with B&Q anticipated to decline 3%.
Investors will be watching both the trading update and the continued development of marketplace and trade channels for further evidence of margin recovery and the pace of trade growth relative to the company's medium-term £5 billion trade sales target.