Does B&Q owner Kingfisher need to DIY itself a new CEO?
The struggling retailer has turned in another disappointing trading update and is pulling out of Russia, Portugal and Spain
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Your support makes all the difference.B&Q owner Kingfisher has decided it’s time to do some more DIY on a business that seems to be in semi-permanent need of repairs these days.
The company is supposedly in the third year of a ‘ONE Kingfisher’ transformation plan, the aim of which is to boost profits by £500m from 2021.
It’s getting tough to see the group coming close to achieving that. Analysts’ forecasts are not optimistic for the near term at least, and the latest trading update was accompanied by words such as ‘disappointing’ and ‘underwhelming’.
The big news accompanying it was embattled CEO Veronique Laury's decision to take her saw to some of the group’s smaller operations. As such, Kingfisher is pulling out of Russia, Spain and Portugal.
The move makes sense. The group needs to focus on fixing its core businesses (90 per cent of sales are accounted for by the UK, France and Poland) parts of which look like they need an awful lot of fixing.
None less than Castorama, the French chain that has long played the role of Kingfisher’s problem child. Sales there plunged by 7.3 per cent on a same store basis. They were impacted by fuel tax protests in France that also hit competitors. But analysts think it is continuing to lose market share to those rivals.
B&Q, meanwhile, recorded a 2.9 per cent fall in sales. Screwfix in Britain and Brico Dépôt showed increases. So did Poland, despite the introduction of Sunday trading laws. Margins crept higher too, which provided some consolation to investors.
None of those were enough, however, to apply any gloss to a wall whose paintwork is cracking.
Laury said that “transformation on this scale is tough, and we are operating in a difficult retail environment”. That is true. No one expects Castorama, in particular, to be a quick fix either.
But Kingfisher needs to be showing more than this.
Laury said the group was making “progress on our ONE Kingfisher transformation” and insisted that it remains “on track to achieve our key strategic milestones for the third year in a row”.
But expectations are low.
There are already questions being asked about why she’s still there given the way the group is struggling. The share price, meanwhile, is finding new five year lows. That isn’t solely because of the difficult external environment.
So, time to hire a new tradesperson? Here’s the problem: the list of names both ready and, crucially, willing to replace her probably isn’t very long.
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