DIY giant Kingfisher has indicated that the “unforeseen business disruption” that sliced around 2% off its first-quarter sales is set to continue and potentially worsen.
At a Q&A with sell-side analysts earlier this week, the B&Q and Screwfix owner shed more light on the disruption it said it has encountered as it introduces its new “Unique and Unified” ranges.
The new ranges form part of the retailer’s five-year One Kingfisher strategy, which – masterminded by Kingfisher chief executive Véronique Laury – is aimed at raising £500m of sustainable annual profit uplift by the end of the five-year term.
The retailer explained it has encountered problems with delayed product deliveries as it rolls out the new ranges, leaving it with gaps on shelves in some cases and customers without alternative products to chose from.
Kingfisher also said it has taken time for its product managers and suppliers to adapt to its new unified IT system.
According to Stifel analyst Scott Ransley, the internal pressures on the new supply chain structure are likely to lead to “further sales disruption” in the core business, and result in a slower roll out of Kingfisher’s new unified ranges in its next full year.
Investec analyst Kate Calvert agreed there’s a high probability that disruption levels could increase.
Ransley also points to the potential for negative halo effects as lack of availability may reduce sales of complimentary products, and said: “Delayed transformation progress may continue to cap short-term investor sentiment.”
However, he predicts the situation will improve “as product managers adapt to their new roles” and more of the business rolls onto Kingfisher’s new unified IT platform.
B&Q is the first of Kingfisher’s fascias to have fully installed the IT system, and work is underway at Castorama and Brico Depot.