NEWS EXTRA


UK RESULTS “SOLID”, BUT KINGFISHER ‘ONE’ WREAKS HAVOC IN FRANCE


Despite LFL declines at B&Q, Kingfisher described a solid performance in the UK and Poland in H1 but said operations in France are “difficult”, as changes surrounding its turnaround plan saw retail profit plummet more than 30%


I


n the UK & Ireland, B&Q reported a fall in like-for-like (LFL) sales in the first half in the UK & Ireland, impacted by


a 5.4% drop in non-weather-related categories, including showroom. Total sales were down 2.3% to £1,833million for the trading period, as parent firm Kingfisher blamed a “weak consumer backdrop”. A 4.9% LFL uplift in weather-related categories was not enough to offset the declines. Meanwhile, Screwfix grew total


sales by 10.4% to £802million – up 4.5% on a like-for-like basis – driven by its


specialist trade desks that


serve plumbers and electricians. The business also saw strong digital growth, up 18%, including a 43% jump in sales via mobile and 21% uplift in click & collect. The continued roll out of new Screwfix outlets has also made a healthy contribution to sales growth. Climbing steadily towards its target of 700 Screwfix trade counters within the UK, the retailer opened 21 new trade outlets in H1, and celebrated the milestone of its 600th store this month in Hoddesdon, Hertfordshire.


Screwfix and B&Q’s figures contributed to Kingfisher UK & Ireland’s overall sales increase of 1.3% to £2,635million. Retail profit grew by 1.2% to £218 million. However, the story was not so


positive in France, with LFL sales down 2.4% and retail profit taking a tumble. Castorama was the hardest hit, with total sales down 6% (-5.8% LFL) to £1,202million, which Kingfisher attributed to weaker footfall, with LFL sales of weather-related categories down 6.9% and sales of non-weather-related


categories,


including showroom, down 5.6%. The group conceded that performance at the 100-strong retail chain was also impacted by transformation-related


surrounding Kingfisher One. The five-year turnaround plan aims to deliver a £500million annual profit uplift by the end of FY 20/21 by simplifying and unifying


across the international group’s retail brands. However, it has not been a smooth ride and Kingfisher CEO Veronique Laury said: “Transformation on this scale is tough, and there are challenges that we’re working through. There


activity


is still much to do to improve our performance in France and to remove inefficiencies within the business, as we continue to transform at pace.” The company added that overall customer perception is not where it needs to be at Castorama in France, with issues over price positioning – which remains higher than the current market – the retailer’s proposition, and low digital penetration. Kingfisher said it remains convinced that its ‘One’ transformation programme is tackling these root causes of its underperformance and has put actions in place to support its H2 performance, including accelerating a move towards everyday low pricing and further development of the digital customer experience. The


retail group’s overall ranges


underperformance in France did narrow slightly in H1, thanks to an improvement in sales at Brico Dépôt, which grew 2.7% (+1.7% LFL) to £1,065million. The uplift reflected a good performance of the new unified ranges but was also supported by investment in marketing, which pushed up costs around the business and contributed towards the 31.1% retail profit drop.


The unified offer under the Kingfisher One programme has


reportedly been well received in categories, such as bathroom and storage but the business admits there is scope to improve implementation of the new ranges and to communicate with customers more effectively. With Kingfisher


now halfway


through its five year transformation, it reported that the business has now “unified” 42% of its products and continues to significantly reduce the number of global suppliers and SKUs, by around 80% to date. New ranges implemented during H1 included additional outdoor ranges, doors, indoor and outdoor lights, nails, bolts and screws and glues. The business maintains that its unified and unique ranges continue to outperform non-unified ranges. Meanwhile, the group announced a change in leadership of its offer and supply chain organisation, with Arja Taaveniku being succeeded by Henri Solère. The official line from Kingfisher is that chief offer and supply chain officer, Ms Taaveniku, who joined the group three years ago, “has recognised that it’s the right time to change the leadership for the function”. She will remain with the group for the next six months to ensure a smooth transition, the firm explained. Kingfisher CEO Véronique Laury added of the results: “The extent and pace of change in the retail sector is profound. We saw these changes and acted


early…our H1 results


reflect a solid performance in the UK and Poland whilst France remains difficult. Looking to the full year we remain on track to deliver our strategic milestones for the third year in a row and have put actions in place to support our performance. The outlook for our main markets continues to be mixed. “We


firmly believe in the


transformation plan benefits and maintain our ambition. The environment is making our task more difficult than expected.”


8 DIY WEEK 28 SEPTEMBER 2018 www.diyweek.net


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