Retailers Kingfisher, B&M and Next backed to benefit from subdued housing market
Published: 09:35 03 Aug 2026 EDT
Kingfisher PLC (LSE:KGF), B&M European Value Retail SA (LSE:BME) and Next PLC (LSE:NXT) were named as RBC Capital Markets' preferred UK retail plays as the broker predicted that the housing market would "hold up rather than surge".
RBC said subdued housing activity and fragile consumer confidence would continue to weigh on home-related spending.
However, stable interest rates, real wage growth and company-specific improvements could offset the difficult backdrop.
The broker expected the divide between northern and southern England to persist. House prices remained stronger across northern England, Scotland, Wales and Northern Ireland, while London and the South East continued to struggle.
Kingfisher, B&M and Dunelm Group PLC (LSE:DNLM) were seen as relatively underexposed to London and could therefore gain from this regional divergence. Home-related products accounted for almost all Dunelm's sales, just over half of Kingfisher's and around a quarter of B&M's.
RBC also saw potential for an "improve not move" trend as high transaction costs encouraged households to renovate their existing properties instead of relocating.
Kingfisher was well placed to increase trade sales through its TradePoint loyalty scheme and expand B&Q's online marketplace. Around half of the marketplace's customers were new to DIY.com, with 15% subsequently buying a B&Q own-brand product.
B&M could improve sales by returning its focus to retail basics, store execution and value for money, RBC said.
Next's prospects were less dependent on UK housing. International sales were approaching 25% of group revenue, with the US providing scope for rapid growth from a low base.
RBC retained 'outperform' ratings on all three companies. Kingfisher trades at 11 times forecast 2027 earnings, B&M at 10 times and Next at 17 times.
