Veronique Laury has had to roll up her sleeves for Kingfisher's makeover. She arrived at the company with a mountain to climb as the DIY craze began to peter out and hastily unveiled a management clear out, a raft of store closures and a hefty five-year turnaround plan. It might be too soon to draw concrete conclusions about the DIY group’s future, but in its latest results Kingfisher’s profits have fallen by a fifth.
The operator of chains including B&Q and Screwfix recorded profits of £512m before tax in the year to the end of January - a 20% drop on 2014. Laury though, tried to redirect attention towards ‘sales and profit growth in constant currencies’, where the firm’s financial performance didn’t appear quite so bad. Adjusted profits were £678m in Kingfisher’s financial year – up 0.3% on the year before. Kingfisher is looking to focus more on its trade-focused Screwfix business, which helped boost UK retail profits 18% to £326m.
Apparently by ‘putting customer needs first’ Kingfisher will ‘deliver a £500m sustainable annual profit uplift, over and above business as usual’ – though this will come at a cost of £800m. Laury feels ‘very confident in our ability to deliver’. Though she would say that, wouldn't she?
Currently it seems that investors agree - or are at least relieved to see that the group's problems are being addressed. Shares were up 3.74% this morning, as the firm defied expectations of a fall in underlying profits.
Kingfisher is shutting 65 B&Q stores and cutting 3,000 jobs in the UK and Ireland and also faces another spanner in the works in the form of Bunnings, soon to be the new name of Homebase, which is being taken over by Australian retail giant Wesfarmers. Kingfisher certainly isn’t taking that threat lightly – a team has been sent Down Under to check out the new competitor.
So Laury’s quest to rebuild solid foundations at Kingfisher is off the ground, not a moment too soon. There’s still plenty more work to be done.