Kingfisher – the group behind DIY chains B&Q, Screwfix and Castorama – is testing the patience of its investors.
Over the last 12 months its shares have tumbled by a third to £2.40 amid growing fears that its ‘One Kingfisher’ transformation plan will fall short of its promises.
Kingfisher is more than halfway through the five-year project, aimed at eventually boosting the bottom line by a hefty £500million per year.
Kingfisher’s Screwfix brand attracts more trade customers and is known for its digital prowess
The firm can’t be accused of total inaction.
At the end of last year, it decided to shut up shop in three countries – Russia, Spain and Portugal – so it could focus instead on stemming the decay in the UK and France. The move put more than 5,000 jobs at risk.
It changed its price strategy at B&Q – cutting the number of promos and deals in return for ‘everyday low prices’. And, as part of a wider reshuffle, the former boss of Screwfix, Graham Bell, was installed at the more challenged B&Q.
But Kingfisher needs to do more to reassure its shareholders, who will be awaiting next week’s results with trepidation.
According to Jefferies, the finals ‘won’t make for pretty reading.’
‘Investors may reward a more aggressive approach by the Kingfisher board,’ the investment bank said, adding that ‘only an extraordinary change in trading fortunes would prevent the need for a rethink’.
The City will seek reassurances beyond the group’s turnaround targets for the year being met, not to mention signs of improvement in the trickier markets – especially France.
And eagle-eyed investors, who currently enjoy a dividend yield of 4.4 per cent, will be watching out for any cuts here too.
At the last update, Markets.com analyst Neil Wilson said Laury sounds like a ‘broken record’.
‘She again reiterated that the transformation plan is working when there is evidence that it’s falling short,’ he argued.
Wilson also added his voice to the chorus calling for a Kingfisher break up.
‘We must again question whether the smarter move is to divest the French business and/or Screwfix. With activists circling, the French business could be hived off, as consistently argued in the past,’ he said.
No doubt the group will come up against fierce criticism again next Wednesday, especially if Laury beats the same old drum.
But if the steadfast boss is forced to depart before her vision is seen through to the end, the distraction of recruiting and installing yet another chief executive (as well as a new finance boss to replace outgoing Karen Witts) may risk sending the company into further disarray.
Investors could regret turning back and wonder if Laury’s was the best path all along.