B&Q owner Kingfisher forecasting £31m increase in tax bill following Budget

B&Q owner Kingfisher has said it expects to see its tax bill increase by about £31 million next year due to plans unveiled in the Government’s Budget, as it narrowed its profit forecast for the year.

The DIY giant said consumer spending weakened as a result of uncertainty in the lead up to the autumn Budget statement in the UK.

It reported total group sales of £3.2 billion between August and October, 1.1 per cent lower than the same period a year ago, when compared like-for-like.

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In the UK and Ireland, sales edged up 0.4 per cent to £1.6 billion.

B&Q owner Kingfisher has said its sales edged higher in the UK and Ireland in recent months, despite uncertainty around the Government's Budget statement holding back stronger consumer spending. Picture: Rui Vieira/PA WireB&Q owner Kingfisher has said its sales edged higher in the UK and Ireland in recent months, despite uncertainty around the Government's Budget statement holding back stronger consumer spending. Picture: Rui Vieira/PA Wire
B&Q owner Kingfisher has said its sales edged higher in the UK and Ireland in recent months, despite uncertainty around the Government's Budget statement holding back stronger consumer spending. Picture: Rui Vieira/PA Wire

Kingfisher said a stronger sales performance in August and September was offset by consumer uncertainty in the UK and France in October as people waited to see what tax measures would be announced in government budgets.

A higher rate of employer national insurance in the UK is set to push up its tax bill by about £31 million in the next financial year.

The planned increase to the national minimum wage will be offset by cost-cutting and improving productivity, Kingfisher also said.

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The company said it was now expecting its adjusted pre-tax profit for the year to be between about £510 million and £540 million, down from a previous maximum of £550 million.

However, Kingfisher chief executive Thierry Garnier pointed to “early signs of improvement” of so-called big ticket purchases in recent months.

Sales of costlier items, such as kitchen and bathroom ranges and products for large home improvement projects, have been weaker for the retailer this year.

“We continued to see improved volume trends in our core categories, supported by repairs, maintenance and existing home renovation,” Mr Garnier said.

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“As expected, sales of our ‘big-ticket’ categories remained soft, although we are seeing early signs of improvement.

“Looking towards next year, recent political and macroeconomic developments have layered incremental uncertainty onto the near-term outlook in our markets.

“As a group, we are strongly positioned to benefit from the inflection to come within home improvement.”

The Kingfisher warning follows a joint letter from dozens of retail firms sent to Chancellor Rachel Reeves last week.

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They warned the sector is facing an additional £7bn in costs as a result of measures announced in the Budget.

More than 70 businesses including Tesco, Asda and Sainsbury’s voiced their concerns in an open letter, saying the changes mean price hikes are a “certainty”.

Ms Reeves revealed a £25.7 billion change to employers’ national insurance contributions in last month’s Budget, which would increase the rate of the tax and the threshold at which firms must pay.

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