If Sir Ian Cheshire had quit Kingfisher seven months ago, he could have retired with a share price above 400p. As it is, when he leaves at the end of next week, he will probably depart with sub-300p on his scorecard. The B&Q group’s shares fell 5% on Tuesday to 288p.
The longer view of the Cheshire’s seven years at the helm remains firmly positive. He inherited a mess, imposed central controls on a fragmented group and binned failed foreign ventures in South Korea and Taiwan. At the low point, before Kingfisher started to generate cash again, you could have picked up the shares for under 100p.
What the past six month’s current share price says is that self-help measures are no match for a French slump.
B&Q in the UK, with a push from the smaller Screwfix operations, is trotting along nicely: profits were up 11% to £70m in the third quarter in the UK and Ireland.
But France, the bigger part of Kingfisher, went into reverse around May. Profits were £120m in the quarter, down 14%, or 8% if you’re counting in euros. Blame tax rises, a slow housing market and general gloom in euro-land. Jefferies’ analyst has a good illustration of how weak the French DIY market is: similarly depressed levels of demand were last seen in the mid-1990s when the French population was 15% smaller and interest rates were 6.5 percentage points higher.
Meanwhile, Kingfisher’s most important smaller market – Poland – has hit a wall; Russia would be fine if only the rouble weren’t in freefall; and China remains an exercise in damage-limitation. Add it all up and retail profits for the group fell 12% to £225m in the quarter.
“Overall, we remain cautious on the outlook, especially in France,” said Cheshire. It’s a limp note on which to leave. French successor Véronique Laury knows what she’s up against.
