(AFP / PHILIPPE HUGUEN)
A “profitability plan” for Castorama: the British group of DIY stores Kingfisher announced on Monday measures to improve its performance in France, where its sales fell by 5.9% last year.
Kingfisher, owner of the Castorama, Brico Dépôt, B&Q and Screwfix brands, has some 2,000 stores in eight countries, mainly in the United Kingdom, Ireland, France and Poland.
After lowering its forecasts for its 2023-2024 financial year ending at the end of January in September and then in November, the group published on Monday an annual net profit down 26%, to 345 million pounds. Its turnover stood at 12.98 billion pounds (-0.6% over one year).
In the United Kingdom and Ireland, the group’s brands “achieved resilient sales and gained market share”, but France was “affected by a low level of household confidence”, summarized the general director of Kingfisher, Thierry Garnier, quoted in a press release.
The group therefore presented on Monday “a new plan intended to simplify the organization in France and significantly improve the performance and profitability of Castorama France, a plan which notably provides for the optimization and modernization of the store network”.
It sets itself “a medium-term operating margin objective of 5% to 7%” in France, where turnover fell by 5.9% (on a comparable basis) last year.
“Around a third” of the 95 Castorama in France “are the least performing stores in our portfolio,” explains Kingfisher. Work will be carried out on 13 stores during the 2024/25 financial year, three of which will see their surface area reduced. Others will be modernized and a Castorama store will be “converted to the more profitable Brico Dépôt format”, it is specified.
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Castorama will also have to “improve its operating margin”, by further reducing its costs while improving its turnover per square meter, for example by emphasizing trade with professionals, by capturing the strong demand linked to energy renovation and by strengthening its online offering through the launch of its new marketplace.
Kingfisher also announced Monday that it would “test in the next twelve months” the franchise model for two Castorama stores in France.
“It’s a way to better manage stores, but also to open new ones. We imagine that in the short to medium term, we could also see Brico Dépôt or Screwfix franchises in France, but we expect to see what the first tests will give,” Mr. Garnier told AFP during a conference call.
Last week, the CGT federation of Commerce and Services denounced in a press release the “Machiavellian strategy” of “rental management” which Kingfisher wishes, according to the union, “to extend during the next store openings in France”, believing that it “condemns employees to lose their social benefits, for the benefit of a group hungry for profits”.
Still on French soil, the group plans during the financial year up to 15 openings of Screwfix points of sale, a brand dedicated to professionals which already has 23 locations in France and where Thierry Garnier speaks of “more potential of 600 (stores) in the medium/long term”.
Regarding the financial outlook for the current financial year, Kingfisher believes that the activity “should prove resilient thanks to the good performance of repair, maintenance and renovation work on existing housing”.
In France particularly, Thierry Garnier reports for February/March “a slightly better trend than at the end of 2023”.
“However”, Kingfisher says it is “cautious about the overall market outlook given the time lag between demand on the real estate market and demand for home improvement” and thus says it is forecasting a result for 2024-2025. adjusted net before tax down again, “between approximately 490 and 550 million pounds sterling”, compared to 568 million over the last financial year.