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Kingfisher aims for £500m profit boost Kingfisher shares slide on revamp plan
(35 minutes later)
Kingfisher, which owns B&Q, has announced a push to increase annual pre-tax profits by £500m within five years and return £600m to shareholders.Kingfisher, which owns B&Q, has announced a push to increase annual pre-tax profits by £500m within five years and return £600m to shareholders.
Chief executive Véronique Laury said the aim was to "leverage the scale of the business by becoming a single, unified company".Chief executive Véronique Laury said the aim was to "leverage the scale of the business by becoming a single, unified company".
Details of the "ONE Kingfisher" plan came ahead of an investor day.Details of the "ONE Kingfisher" plan came ahead of an investor day.
The retailer, which also owns Screwfix, will face more competition following the sale of Homebase to Wesfarmers. Investors reacted negatively to the move, sending Kingfisher shares down 6.1% to 324p in afternoon trading.
The company plans to rebrand the DIY chain as Bunnings, the same name as its successful Australian business, and revamp stores. The slide made it the biggest faller on the FTSE 100 on Monday.
The retailer, which also owns Screwfix as well as Castorama in France, will face more competition following the sale of Homebase to Wesfarmers.
The Australian company plans to rebrand the DIY chain as Bunnings and revamp stores.
Ms Laury said improving Kingfisher's digital capability was one of its priorities.Ms Laury said improving Kingfisher's digital capability was one of its priorities.
Clive Black, head of research at Shore Capital, said: "It looks like Kingfisher is coming to terms with the realities of the limitations of large shops, so a focus upon the digital age. We think shareholders will welcome the focus on digital over stores and the return of cash, albeit the exceptional costs are substantial."Clive Black, head of research at Shore Capital, said: "It looks like Kingfisher is coming to terms with the realities of the limitations of large shops, so a focus upon the digital age. We think shareholders will welcome the focus on digital over stores and the return of cash, albeit the exceptional costs are substantial."
Independent retail analyst Nick Bubb said that the plan's goals would involve costs of up to £800m.Independent retail analyst Nick Bubb said that the plan's goals would involve costs of up to £800m.
"The benefits aren't as clear-cut as you might think, although the news that Kingfisher also intend to return about £600m of capital to shareholders over the next three years (via share buybacks) will provide some comfort," he said."The benefits aren't as clear-cut as you might think, although the news that Kingfisher also intend to return about £600m of capital to shareholders over the next three years (via share buybacks) will provide some comfort," he said.
Shares fell more than 6% to 324p in afternoon trading on Monday, making it the biggest faller on the FTSE 100.
Investec analyst Kate Calvert said the potential returns for shareholders outlined in the plan did not outweigh the risks involved.Investec analyst Kate Calvert said the potential returns for shareholders outlined in the plan did not outweigh the risks involved.
Board changeBoard change
"There are a lot of moving parts and no guarantee that all the costs will fall out and the profits come through," she said."There are a lot of moving parts and no guarantee that all the costs will fall out and the profits come through," she said.
Kingfisher also said Rakhi Parekh, a former Amazon UK executive, had been appointed a non-executive director.Kingfisher also said Rakhi Parekh, a former Amazon UK executive, had been appointed a non-executive director.
Ms Laury said Ms Parekh's extensive experience in digital and multichannel retailing would be vital to the company's plans.Ms Laury said Ms Parekh's extensive experience in digital and multichannel retailing would be vital to the company's plans.
Kingfisher said in November that profit for the 13 weeks to 1 November fell 11.8% to £225m, with total sales down 3.6%.Kingfisher said in November that profit for the 13 weeks to 1 November fell 11.8% to £225m, with total sales down 3.6%.
In France, where is owns chains including Castorama, sales slid by 9.3%, but the poor performance was partially offset by a 4.8% rise in the UK. In France, sales slid by 9.3%, but the poor performance was partially offset by a 4.8% rise in the UK.