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Kingfisher CEO Véronique Laury to leave as the B&Q owner posts slump in 2018 profit

“As the transformation approaches its final year, I believe it is right for someone else to lead the next phase of the ONE Kingfisher journey," said chief executive Véronique Laury.

B&Q and Castorama sales dropped in 2018

DIY retailer Kingfisher PLC (LON:KGF) announced the resignation of chief executive Véronique Laury as full-year pre-tax profit plunged 52.8%.

The owner of B&Q and Screwfix said it has kicked off a succession process for the position of chief executive.

READ: B&Q owner Kingfisher to exit Russia, Spain and Portugal as third-quarter sales fall

A departure date for Laury has not been decided yet and she will remain in the role until then.

Laury, who has been chief executive for the past four years, has entered the fourth year of her five-year "One Kingfisher" turnaround plan but the retailer continues to struggle.

A tough UK retail market has not helped but the biggest drag on its performance has been French DIY business Castorama.

“Leading the transformation has been so exciting but also very challenging,” Laury said in Wednesday’s announcement.

“As the transformation approaches its final year, I believe it is right for someone else to lead the next phase of the ONE Kingfisher journey.”

The tranformation is set to cost £800mln over the five years and involves unifying product ranges across brands, investing in e-commerce and making cost savings.  

The group was targeting a £500mln increase in profits after completing the overhaul. However, Laury said this target  “no longer reflected the way the company is managed”.

Profits hit by restructuring costs

Restructuring costs and other exceptional items pulled statutory pre-tax profit down to £322mln last year from £622mln a year ago.

Underlying pre-tax profit, which excludes transformation and exceptional costs, decreased 13% to £693mln.

Retail profit fell 11.3% to £753mln.

Gross margins stood at 36.9%, flat at actual exchange rates but down 10 basis points at constant currency.

Poor performance at Castorama and B&Q drag on sales

Sales edged up 0.3% to £11.69bn on a reported basis but fell 1.6% on a like-for-like basis as declines at B&Q in the UK and Castorama in France offset growth at Screwfix in the UK and Brico Depot in France and Poland.

B&Q generated sales of £3.39bn, down 2.8% on a reported basis or 3% on a like-for-like basis, led by weak demand for "non-weather-related" categories. 

Castorama sales dropped 7.3% to £2.25bn, reflecting lower footfall, price cuts and the impact of French strikes in the fourth quarter. Like-for-like sales at Castorama fell 7.1%.

Screwfix total sales increased by 10.3% or 4.1% on a like-for-like basis to £1.67bn, driven by specialist trade desks exclusive to plumbers and electricians. 

Brico Dépôt total sales grew by 1.4%, or 0.4% at like-for-like, to £2.03bn due to a good performance of new unified and unique ranges. 

Kingfisher said it was taking steps to address the underperformance at Castorama by cutting costs, investing in the digital offering, introducing new unique ranges and improving its price positioning.

The retailer is considering the closure of 15 poor performing stores across the business over next two years.

It is also closing all of its 19 Screwfix Germany outlets and plans to exit Russia and Iberia to focus on more profitable markets.

Kingfisher left its full year dividend unchanged at 10.8p each. 

Outlook mixed

Looking to the 2019/20 financial year, the company expects the gross margin to be flat after clearance costs and is targeting growth in sales, gross margins and return on capital employed over the medium term. 

“As we enter FY 19/20, the outlook by country is mixed,” the group said.

“The UK market remains uncertain and we are mindful of softer housing market activity in France. In Poland the market remains supportive. We are positive about the longer term outlook for the home improvement sector and we are focused on delivering growth in sales, margin and returns.”

Shares fell 2.3% to 239p in morning trading.

Digital chief to retire

Alongside the news of Laury's departure, the company announced Steve Willett, chief transformation, digital and IT officer, was going to retire after nearly 20 years with the business.

It follows the resignation of Karen Witts, finance director, and Arja Taaveniku, chief offer and supply chain officer, over the past year.

John Wartig is replacing Witts on an interim basis.

Kingfisher should have found a new CEO a long time ago, says analyst 

AJ Bell investment director, Russ Mould, said the decision to find a new chief executive at Kingfisher should have been made long ago.

"The struggles of this company are full laid out in its full year results with underlying pre-tax profit down 13% and no growth in the dividend," he added. 

“Kingfisher talks about having spent three years building an engine to drive the business. The financial results would suggest it only has the strength of a rubber band-powered motor."

Quick facts: Kingfisher PLC


Price: 344 GBX

Market Cap: £7.27 billion

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