Kingfisher continues renovation work
● ‘Disappointing’ results, according to analyst, as sales remain flat at £3bn
Kingfisher, which owns B&Q, warned there was “no quick fix” to its problems as it posted a slump in sales at the DIY chain, and said it will exit Russia, Spain and Portugal to focus on its core markets.
B&Q in the UK saw a 2.9 per cent fall in like-for-like sales in the third quarter, ending 31 October. It bemoaned a difficult retail market as total sales at the chain fell 2.8 per cent to £850 million, amid consumer belt-tightening in the UK.
In France, Kingfisher’s troubled Castorama business saw comparable sales plummet 7.3 per cent.
Chief executive Veronique Laury, who is overseeing a five-year strategic overhaul of the firm, said: “Transformation on this scale is tough, and we are operating in a difficult retail environment. We face challenges and we are addressing them. Our main challenge is Castorama France and we shared our action plan to fix it at the half year.
“Our action plan is now implemented for this year. We have accelerated our move to an everyday low-price strategy and have launched a new
0 B&Q saw a 2.9 per cent fall in like-for-like sales during the quarter.
HARGREAVES LANSDOWN
marketing campaign to make it visible to our customers. However, there is no quick fix.”
Kingfisher said it was exiting Russia, Spain and Portugal to focus on markets where it has or could have a “market-leading position”.
One brighter spot was Screwfix, which saw like-forlike sales rise 4.1 per cent.
Total Kingfisher group sales forthequartercameinat£3.05 billion. Comparable sales in the UK and Ireland fell 0.7 per cent to £1.29bn and in France fell 3.4 per cent to £1.11bn.
In the UK, B&Q’S turnaround has seen Kingfisher shut 65 shops and slash about 3,000 jobs in the UK and Ireland over the last two and a half years.
It has also been shaking up its ranges and improving its online offering, while the group recently announced it was investing £100m as part of plans to lower everyday prices.
Kingfisher has nearly 24,700 staff in the UK and Ireland and more than 63,900 overall.
Sophie Lund-yates, equity analyst at Hargreaves Lansdown, branded the results “disappointing”, adding that group like-for-like sales fell faster than seen at the half-year stage.
She added that the results “aren’t a huge surprise” given the difficult backdrop in the UK and France, but investors “would still like Kingfisher to be painting a slightly brighter picture”.
Lund-yates continued by saying Kingfisher has been “taking a long hard look in the mirror”, with its decision to exit Russia, Spain and Portugal a major step in its streamlining plans and should enable it to “really focus” on its core businesses in the UK and France. “Investors will be consoled to see margins moving in the right direction, even if they’ve crept rather than jumped up. The fact still remains though French and UK tills just aren’t ringing as often as they used to, and it’s going to take a lot more work to reverse the impact of that.”
Also commenting was Richard Hunter, head of markets at Interactive Investor. He said Kingfisher’s transformation “is a work in progress and it may be some time before the benefits are fully felt”. And he noted that its shares “have not responded well to recent updates”, and over the last year have dropped 19 per cent, compared to a 6.2 per cent decline for the wider FTSE100.
“The fact remains French and UK tills just aren’t ringing as often as they used to, and it’s going to take a lot more work to reverse the impact of that.”