B&Q owner to scrap operations in Russia, Portugal & Spain as sales falter

547

Kingfisher has said that it plans to pull its operations in Russia, Spain and Portugal as it posts sales declines across its key markets in France and the UK.

For the three months to October 31, the B&Q and Screwfix parent company saw total group sales rise 1.2 per cent to £3.05 billion.

Although its Screwfix business continued to grow, seeing total sales rise 10.6 per cent, this failed to offset falling sales in its key markets.

On a like-for-like basis, group sales slipped 1.3 per cent, dragged down by a 2.8 per cent total sales drop at B&Q after it took a hit from scrapping its installation service.

Its French arm Castorama provided the most significant downward pressure, with total sales dropping 7.6 per cent and 7.3 per cent on a like-for-like basis.

In light of the lacklustre performances, Kingfisher has now announced it would withdraw its operations in Spain, Russia and Portugal in order for it to focus its efforts on its struggling “main markets where we have, or can reach, a market leading position and create good homes by making home improvement accessible for everyone”.

Chief executive Veronique Laury said: “Transformation on this scale is tough, and we are operating in a difficult retail environment.

“We face challenges and we are addressing them. Our main challenge is Castorama France and we shared our action plan to fix it at the half year. Our action plan is now implemented for this year.

“We are committed to our plan and to building a strong business for the long-term. As part of this commitment, we have taken the decision to exit Russia, Spain and Portugal.”

Hargreaves Lansdown’s equity analyst Sophie Lund-Yates said: “These are a disappointing set of numbers from Kingfisher, with group like-for-like sales declining faster than we saw at the half-year.

“The group has been grappling with headwinds in both the UK and French markets, so these results aren’t a huge surprise, but investors would still like Kingfisher to be painting a slightly brighter picture.

“Like all bricks and mortar retailers, Kingfisher’s facing a tough climate – it’s been taking a long hard look in the mirror and decided slimming down is the way forwards.

“The decision to exit Russia, Spain and Portugal is a big step in the group’s streamlining plans and should mean it can really focus on its core businesses in the UK and France.”

Click here to sign up to Retail Gazette‘s free daily email newsletter