City investors betting on major drop in price of B&Q owner Kingfisher, as short positions against company reach record high
City investors are betting on a major drop in the price of B&Q owner Kingfisher, as short positions against the company reached a record high.
The FTSE home improvement retailer has been hit by a blitz in short-selling as weaknesses in the DIY market start to materialise.
Government data reveals short positions account for just over 9 per cent of Kingfisher’s stock – about £440million in value.
Slowdown: DIY retailers did well during the pandemic as consumers spent more on home improvements and built home offices in their gardens
That is the highest since records began and more than double the level in April.
Last month, rival Wickes warned of a slowdown because customers were reacting to an ‘uncertain macroeconomic backdrop’.
The gloomy update sent a chill through the DIY sector. Kingfisher’s shares slid 8.5 per cent to £2.47.
DIY retailers did well during the pandemic as consumers spent more on home improvements and built home offices in their gardens.
But the end of Covid restrictions has seen consumer spending shift towards eating out and overseas travel.
Soaring prices and rising household bills have also left the outlook increasingly uncertain.
Kingfisher’s price has already dropped almost 30 per cent this year. But short-sellers – traders who borrow shares under contract and make a profit if the price falls – expect it to fall even further.
In May, Kingfisher said it would repurchase £300million in shares just one month after completing its previous buyback programme of the same amount. Its first-half results are next month.