Written by: Keith Tully
Reviewed: Tuesday 31st March, 2015
Kingfisher, the company that owns B&Q-branded home improvement stores in the UK and Ireland, has announced plans to close 60 of its outlets.
An announcement to that effect came as the company reported a 15.2 per cent drop in pre-tax profits for 2014 as compared with the previous 12-month period.
With much of Kingfisher’s business done in France, management teams are focussed on a restructuring plan aimed at creating a “single, unified company where customer needs come first,” according to its newly-appointed chief executive Véronique Laury.
“We have a lot to do and we are announcing today a set of first ‘sharp’ decisions which are already underway including the closure of around 15 per cent surplus B&Q space (c.60 stores) and our few loss making stores in Europe,” Laury said in a statement.
There are currently 360 B&Q stores located around the UK and Ireland, with the closure of 60 of those outlets set to result in a one-off cost to Kingfisher of around £350 million.
“We believe our plans will drive an increase in the value of our business for shareholders, with improved financial metrics through higher sales and lower costs, whilst at the same time optimising the generation and use of cash,” said Kingfisher’s chief financial officer Karen Watts in a statement.
“In the short term, whilst we remain encouraged by the improving economic backdrop in the UK, we remain cautious on the outlook for France, our biggest market,” she added.
While Kingfisher scales back its B&Q operations in the UK, another of its businesses Screwfix has enjoyed sustained growth in recent quarters. The retail supplier of trade tools and hardware products grew its revenues by just over 25 per cent in 2014 and opened 60 new branches nationwide.
Along with its restructuring and financial announcements, Kingfisher revealed that Kevin O’Byrne, B&Q’s chief executive in the UK and Ireland is to leave the business after more than six years in May 2015. The management change follows the appointment of Ms Laury as Kingfisher CEO in September 2014.
Reflecting on Kingfisher’s overall position in its industry, Laury said: “Home improvement is a great market with huge potential and Kingfisher has a strong position within it with further scope to grow in a sustainable way. However, it is clear to me that we need to organise ourselves very differently to unlock our potential.”