Howdens says UK kitchen market likely to contract again, shares slide

(Sharecast News) - Shares in Howden Joinery tumbled on Thursday as it reported broadly stable full-year profits and revenue in a "challenging" market and said it expects the UK kitchen market to contract again this year. In the 52 weeks to 28 December, pre-tax profit nudged up 0.2% to £328.1m on revenue of £2.3bn, up 0.5% on the previous year.

UK revenue was 0.3% higher at £2.2bn, reflecting ongoing market share gains, despite a contraction in the UK kitchen market.

International revenue was up 7% at £74.7m, with "good progress" in building out the trade-only business model in France and the Republic of Ireland, Howdens said.

Cash at the year-end was £343.6m, up from £282.8m at the end of December 2023.

Chief executive Andrew Livingston said: "Howdens performed well in a challenging market, gaining further market share. We continued to invest in developing our kitchen and joinery ranges, opening more depots, and in new digital capabilities. We are also investing in our manufacturing operations and supply chain to support our trade customers with high-quality, easy-to-fit products that are reliably in stock.

"Whilst we anticipate the kitchen market is likely to contract further in 2025, we are confident that our differentiated model, combined with our strategic initiatives, mean we are well placed to gain further market share. Reflecting the group's strong financial position, we have announced today a new £100m share buyback programme while continuing to invest in the business."

At 0955 GMT, the shares were down 7.5% at 776.50p.

Russ Mould, investment director at AJ Bell, said: "There have been mixed messages from the home improvement sector in recent months.

"While DIY retailer Wickes and tile specialist Topps Tiles were remarkably upbeat, B&Q owner Kingfisher warned last November that uncertainties around budgets from new governments in the UK and France had a negative impact on demand for its products and services.

"Howden Joinery has now followed in Kingfisher's steps by highlighting challenging market conditions and guiding for its kitchen market to contract further in 2025.

"The UK economic outlook is far from rosy and consumer sentiment has deteriorated since Rachel Reeves made 'tough decisions' in her Budget last October. Prices could go up and jobs could be cut as companies look to offset a rise in employer-related costs from April. That's disastrous for a company like Howden Joinery which relies on people being in a happy place to hand over thousands of pounds to do up their kitchen.

"Howden won't be suffering alone and it could still gain market share. However, that's not enough to stop investors fretting about near-term headwinds, hence why the shares sank on the news."