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Kingfisher shares tumbled on Monday after the owner of DIY chain B&Q became the latest UK retailer to warn that the increase in employers’ national insurance contributions announced in the Budget would hit profits this year.
The FTSE 100 company said it would face additional costs of £31mn this year from the changes in NI, which include lifting the rate of employer contributions to 15 per cent and lowering the threshold at which businesses start paying.
Alongside the hit from chancellor Rachel Reeves’ Budget, Kingfisher, which owns the French DIY chain Castorama, said proposed changes to social taxes in France would cost it £14mn this year.
As a result of the higher costs in the UK and France, Kingfisher said its pre-tax profits would be between £510mn and £540mn, down from a previous forecast of £510mn and £550mn.
Kingfisher’s chief executive Thierry Garnier said trading in October had also been depressed as consumer confidence weakened in the UK and France.
“Improved performance in August and September was offset by the impact of increased consumer uncertainty in the UK and France in October, related to government budgets in both countries,” Garnier said.
Shares in Kingfisher were down 15 per cent at 251 pence on Monday.
Kingfisher joins a wave of retailers that have sounded the alarm over the damage from the Budget as well as an increase in the national living wage that comes into effect in April.
Tesco, Boots, Next and Marks and Spencer this month signed a letter to Reeves, alongside dozens of UK retailers, warning of annual costs to the sector of up to £7bn stemming from the Budget.
The letter, which had 79 signatories and was co-ordinated by lobby group British Retail Consortium, complained about costs arising from changes to NI and the national living wage. They warned that the higher costs would feed through into job losses and higher prices for customers.
Referring to the higher costs, Kingfisher said: “We are developing a range of additional mitigations, but at this stage expect to offset only part of this impact.”
