Cheshire lays out ‘seven major steps’ for Kingfisher

Jun 5 2008 by Peter McCusker, The Journal

KINGFISHER’s new chief executive Ian Cheshire has set out “seven major steps” to improving the fortunes of the B&Q owner.

The former head of the DIY chain’s UK operation was promoted to the home improvement giant’s top job in January and is aiming to reverse three years of falling profits.

This came as the B&Q owner said like-for-like sales in the UK slumped by nearly 8% after a “very tough” first quarter.

Same store sales were down 7.9% during the 13 weeks to May 3, with total UK sales dipping 3% to £1.13bn.

Retail profits for the group’s UK business – which has been hit by the housing market slowdown – were also down 8.5% to £33m during the period.

Under a new incentive scheme, Mr Cheshire stands to earn around £16m in salary, bonus and shares if he can double group profits over the next four years. Other senior managers are also the subject of incentive schemes.

The top item on Mr Cheshire’s to-do list involves securing more profitable sales at B&Q and taking the division’s operating margin from 3.3% to around 7%. It will achieve this through sales density improvement and lower operating cost ratios.

B&Q is roughly halfway through a store refurbishment programme, which is devoting more space to showroom displays of complete kitchens and bathrooms as it seeks to move away from aisle-based layouts. Evidence earlier this year showed the revamped stores were delivering 13% higher sales on average than the older-format sites.

It will also look to roll out more of its fast-growing UK trade supplier arm Screwfix, with Mr Cheshire planning 21 more Screwfix trade counters this year. The chain currently operates from 117 outlets, and enjoyed a 17.1% profit lift during the group’s first quarter this year.

Overseas, Kingfisher will look to utilise the strengths of its two major brands in France, given that Castorama and Brico Depot had consistently grown market share over the last five years. B&Q China lost £8m during the first quarter this year.