Kingfisher’s programme of self-help has paid dividends, and not just to its shareholders.
Kingfisher’s programme of self-help has paid dividends, and not just to its shareholders. The DIY giant, the third biggest in the world, updates the market next week on its third quarter with analysts accustomed to hearing a flow of positive news from the retailer.
When Ian Cheshire became group chief executive in 2008, he told the City that he was not expecting any uplift in the market and that Kingfisher would have to drive improvements itself if it was to continue to grow.
Cheshire has remained true to the DIY mantra and has renovated Kingfisher to make it a compelling investment case. One area of focus for the retailer is product innovation, in a market that has sometimes lacked it. Kingfisher believes that if the established brands in the market are not sufficiently driving innovation, then it will.
The retailer has opened a Kingfisher Innovation Centre in Lille, northern France, where it works with suppliers, universities and other specialists to develop a pipeline of exclusive products and a common core range across the group to drive margin in stores.
Another string to the retailer’s bow is its international business. Although UK trading has slipped in the tough trading environment – like-for-likes were down 2% in its half year – its strong overseas business has been a source of comfort for investors, and it is a focus for expansion when Kingfisher’s new growth strategy kicks in next year.
However, for all Kingfisher’s DIY initiatives, there is no ignoring the UK market, which has been in decline for six years, according to Cheshire. Until housing transactions start moving in the right direction, there are unlikely to be any improvements any time soon.
And while Kingfisher’s overseas business – which is largely European – is seen as a way to spread risk by some, others worry that such hefty exposure to the crisis-hit eurozone could prove dangerous.
But Cheshire has proved to be a Mr Fix It for Kingfisher, and will no doubt already be drilling down to the issues to minimise any effect the crisis has on the retailer.