Kingfisher has been one of the major UK groups to benefit from the housing boom triggered by the government’s Help to Buy scheme, with thousands of customers choosing to engage in a little DIY amidst a renewed buoyancy in the residential market.
However, ongoing changes in the retail industry have meant many of the group’s large B&Q warehouses are no longer turning a sufficient profit – a factor which has led to the group announcing an upcoming store closure programme to take effect during the next two years.
Although the exact number of closures has not yet been confirmed, group executives have indicated that around 60 of the home improvement chain’s branches will be offloaded as a means of running the business more efficiently.
The group has, however, revealed the locations for the first six closures: Dundee, Southampton, Barnsley, Hyde in Greater Manchester, Baums Lane in Mansfield and B&Q’s Station Road outlet in Stechford, Birmingham.
All affected stores will be located in the UK and Ireland, where pre-tax profits have fallen by 15.2 per cent to £644 million in the last financial year despite sales rising by an encouraging 5.4 per cent. A further announcement by the group addressed this whilst revealing chief executive for the UK and Ireland division, Kevin O’Byrne, will leave his post on the 15th of May this year.
The closures, which are expected to incur a one-off cost of £350 million to implement, mark the first major decision taken by new Kingfisher chief executive Veronique Laury. Ms Laury took the position last September following Sir Ian Cheshire’s decision to stand down from the role.
She says; “Home improvement is a great market with huge potential and Kingfisher has a strong position within it with further scope to grow in a sustainable way, however, it is clear to me that we need to organise ourselves very differently to unlock our potential.
“This will involve taking what is essentially a locally managed set of businesses and creating instead a single, unified company where customer needs come first.
“”We have a lot to do and we are announcing today a set of first ‘sharp’ decisions which are already underway including the closure of around 15pc surplus B&Q space and our few loss making stores in Europe, the development of unified garden and bathroom businesses and the start of a big box revitalisation programme across Europe.”
Although around 3,000 jobs are thought to be under threat as a result of the closures, Kingfisher intends to keep redundancies to a minimum by redeploying around 1,500 existing positions to neighbouring stores. In addition, Kingfisher intends to open a further 60 Screwfix stores in the UK and Ireland in a similar timeframe to the closure programme, with staff from B&Q’s stricken stores expected to be offered first refusal upon the 900 jobs created there.
With the DIY market booming it is surprising that B&Q and key rival Homebase are currently forced to engage in mass store closure programmes. The question is why this is happening and what, if anything, can be done to turn this situation around.
