This set of half-year results will be the last under Véronique Laury as chief executive of Kingfisher (KGF). She will be replaced next week by Thierry Garnier. Investors in Kingfisher are likely to welcome a fresh perspective on the home improvements products provider, as pre-tax profits fell 12.5 per cent to £245m during the period, with growth in Screwfix and Poland and Romania not fully compensating for declines in B&Q and France.
Ms Laury was the mastermind behind the ONE Kingfisher transformation plan that was established in the 2016-17 financial year, which aimed to unify Kingfisher’s product offering, improve its digital capability, and optimise operational efficiency. So far, 59 per cent of product ranges have been unified, improving Kingfisher's buying power and boosting sales and gross margins earned from those products, which have outperformed non-unified ranges. The roll-out of the base platform of its unified IT system is “substantially complete”. Meanwhile, digital sales grew 18 per cent in the first half, and now account for 7 per cent of group sales.
But France has continued to be a sore spot for Kingfisher. Home improvements retailer Castorama continued to underperform, and the move to an “everyday low prices” strategy in the second half of the 2018-19 financial year resulted in a 2 per cent like-for-like sales decline. The transformation programme at Castorama has caused issues in stock planning, stock management and logistics processes, which has hurt stock availability and order fulfilment rates. Management is aiming to improve price positioning and perception of the business by French customers, and further push unification of product lines, with 60 per cent unified post-period-end. It is also planning to close 15 stores across the business, 11 of which will be in France, over the next 18 months.
Analysts at UBS expect EPS of 22.7p in the year to January 2020, increasing to 23.2p in FY2021.
| KINGFISHER (KGF) | ||||
| ORD PRICE: | 200p | MARKET VALUE: | £4.21bn | |
| TOUCH: | 199.6-200p | 12-MONTH HIGH: | 268p | LOW: 186p |
| DIVIDEND YIELD: | 5.4% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 302p* | NET CASH**: | £254m | |
| Half-year to 31 Jul | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 6.08 | 280 | 9.6 | 3.3 |
| 2019 | 6.00 | 245 | 8.1 | 3.3 |
| % change | -1 | -13 | -16 | - |
| Ex-div: | 03 Oct | |||
| Payment: | 08 Nov | |||
| *Includes intangible assets of £2.81bn, or 133p a share **Excludes lease liabilities of £2.64bn | ||||
