Retail Viewpoint – Kingfisher
Kingfisher’s UK division performed poorly as its B&Q fascia reported a 6.3% decline in sales to £1,875m in H1 2017/18. While much of this decline reflects B&Q’s store rationalisation programme, which has seen the retailer close a number of poor performing stores, l-f-l B&Q sales were still down 2.3%, resulting in continued market share erosion both in DIY and gardening.
The decline of group sales in the UK & Ireland, which fell from £2,609m to £2,602m, has been saved to some extent by Kingfisher’s Screwfix division, which continues to achieve strong double digit growth. Screwfix sales grew 18.7% to £727m, bolstered by the opening of 16 new outlets in the period. However, the DIY specialist has slowed down its rate of store openings, having opened 60 stores in H1 2016/17, and is now behind its target of at least 60 new store openings a year, which it announced in 2015.
The retailer’s ONE Kingfisher joint-buying programme, while less reactive than its competitor Wickes that underwent a similar rationalisation plan three years ago, will ultimately deliver a more streamlined product offer to consumers, as well as cost savings and fewer supplier relationships to manage for Kingfisher. The disruption from implementing the programme has impacted Kingfisher’s H1 results, but an earlier than planned roll-out of a unified IT platform in H2 will pave the way to a more successful 2018.
The DIY & gardening market will begin to recover from 2018 onwards, after weak consumer confidence has deterred consumers from renovating their homes in 2017. While Kingfisher still has three years left of its ONE Kingfisher programme, the steps that it has taken already to reduce SKUs and improve its digital offer should see the retailer consolidate its position as the leading DIY & gardening specialist.
Source: GlobalData, 20th September 2017