Results from Kingfisher (KGF) are effectively in two parts. The first is the set of full year numbers up to the end of January. There is not too much to say about those. The second is the thoughts of the company over the last few months which are naturally far more interesting...given its leading DIY retail positions via B&Q in the UK and Castorama in France plus the very strongly performing (over recent years) Screwfix brand...
There is also a newish CEO, Thierry Garnier. Back in November, I noted that he should be brave and that 'now is the time to break it up...or at least stabilise sales sufficiently to edge up the valuation metrics from these depressed levels'. Sadly there seems little likelihood of the former and naturally broader events have slightly overtaken the latter. Still, looking at the last 15 weeks up to mid-June, group like-for-likes have at least improved from the dog days of March (group like-for-likes down over 75%) to up over 25% for every week of the last five. And it is not all in the physical stores, where e-commerce sales have been running at +200% year-on-year over the same year. People are finding new ways to get hold of their DIY kit...and Kingfisher is finding new ways to get it to them. Naturally, however life remains tricky.
Hence why the company had 50% of its staff furloughed in April (admittedly now in single digit percentages), passed on the final dividend and undertook various other cost suppression initiatives. Fortunately it - as noted in the link above - had lowish leverage and it notes 'over £3bn of total liquidity as at 12 June 2020'. And it has a new strategy too: ‘Powered by Kingfisher’, which notes 'Kingfisher banners are not the same. This is a strength...They address diverse customer needs, operate different models and will have a clear positioning and plan'. Absolutely! This is why it should break it up, specifically spinning off the Screwfix brand. I would go so much further than its assertion that the aim is to 'Simplify and Grow...Move to balanced, simpler local-group operating model with an agile culture'. Time to think big and radical: it is that sort of time after all.
As for Kingfisher shares, they are effectively back to the level they were at during the second half of 2019 and the first couple of months of 2020. I called them cheap then but you need a catalyst and that remains a splitting up of the group. Time to be even braver Monsieur Garnier! Fortunes favours it...
Filed under: Kingfisher, Robinhood, Woodford fund, Union Jack Oil, Petards, Tesco, Chris Bailey
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