The excitement generated by the appointment of Ikea UK boss Peter Høgsted to head the international division and DSGi’s Kevin O’Byrne to run the retailer’s finances was evident in the near-8 per cent rise in Kingfisher’s share price yesterday.
Høgsted is a smart retailer with plenty of international experience and is likely to bring fresh thinking as well as operational discipline. He is charismatic in an understated way and good with people, so should be able to enthuse and engage his new colleagues.
O’Byrne, as a graduate of the DSGi hard school, should be in a good position to apply the rigorous financial measures and deliver the improved business metrics that form a central plank of Cheshire’s reinvigoration strategy.
Kingfisher’s management line-up now looks pretty strong. There’s a good mix of established internal talent and fresh faces. The ground rules for improvement have been set and the foundations for action laid.
Cheshire, who took up his role at the start of this year, has moved quickly to change the company mindset and surround himself with skilled retail operators. The real work is still to come, but Kingfisher is now much better-placed to power forward once again.
Somerfield-Co-op deal a red herring
The£1.57 billion price tag attached to Somerfield, which was sold to the Co-op on Wednesday, was way below the£2 billion to£2.5 billion originally hoped for.
But Somerfield’s backers – including private equity house Apax, tycoon Robert Tchenguiz and Barclays Capital – will not be feeling too sorry for themselves. They have made a return of double their original equity investment of£400 million. In these credit-crunched times, that’s good going.
Apax, of course, has other retail investments, most notably fashion group New Look. The word is, though, that there will be no sale of New Look in the foreseeable future. Instead, the focus will be on continued growth, particularly overseas.
So might the successful sale of Somerfield, even if it is for less than had been hoped for, prompt private equity firms to renew their interest in retailers in the light of lowly valuations?
Don’t bet on it. The continuing difficulties of raising debt, risk and likely returns all continue to weigh heavy in any calculations being made in Mayfair and St James’s.
There are also problems with potential retail bid targets, such as Woolworths, where pension considerations would complicate any acquisition attempt.
So private equity exits remain more likely – but, despite Somerfield, there may not even be many of those.