Kingfisher Struggling to Sell Spanish, Portuguese and Russian Operations

Over the weekend, the Financial Times reported that Kingfisher has yet to find a buyer for its Iberian and Russian DIY operations.

Kingfisher operates 28 Brico Dépôt stores in Spain, three in Portugal, and 20 Castorama stores in Russia. 

In November last year, Kingfisher confirmed its intention to sell its Spanish, Portuguese and Russian businesses, to allow it to focus on its core UK, French and Polish markets.

A source told the FT of the sale: “It has proved a lot more tricky than they expected,”.

A backdrop of weak consumer sentiment and spending is also understood to have impacted upon interest in the Castorama and Brico Dépôt stores, as private equity firms take a cautious approach to retail investments. 

The FT emphasised how difficult market conditions have affected the One Kingfisher plan, established by outgoing-CEO Veronique Laury in 2015.  The programme's intention was to unify the disparate Kingfisher businesses, allowing them to benefit from economies of scale, and implement a standardised product range across stores.  With the exception of Screwfix, the remaining companies now operate on the same IT system and more than half of the product ranges are now the same across group operations.

In a March 2019 update, Kingfisher advised that the 'building of the Kingfisher 'engine' was nearing completion'.  The One Kingfisher transformation programme has drawn criticism from shareholders and analysts who did not believe in the promised returns of £500m in additional profit by 2021 - an ambitious target that has effectively since been withdrawn, with Kingfisher stating: "Benefits offset by weaker performance from underlying business due to external environment and underperforming parts of the business; clear priorities for year ahead".

On Wednesday, Kingfisher will update the market on its half-year performance, with analysts predicting a 3.8% decline in like-for-like half-year sales in France, and less than half that for B&Q UK & Ireland. 

It is understood that the presentation of the results will be made by Andy Coslett (chairman) and John Wartig (interim finance director) rather than CEO Veronique Laury, who will leave the business later this month, succeeded by Thierry Garnier.  

Source : Insight DIY Team

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