Friday 25th Sep 2020 - Logistics & Supply Chain

Kingfisher targets MH spend in review

Kingfisher, which owns B&Q and Screwfix, says it is making good progress with plans to boost operational efficiency generating £100m annual profit uplift.

A central part of the five-year plan is rationalising the purchase of “goods not for resale” (GNFR), which accounts for £1.2 billion of spending annually.

In its results for the year to 31st January, the company said it was progressing well with first wave of GNFR spend which covers nine categories including mechanical handling equipment, media buying, printing and paper – accounting for £350m of spend. It expects to see the benefit from this wave to come through in 2016-17.

It has also started analysis on the £400m of GNFR spend in the second wave. This covers another nine categories including shop-fitting, point of sale material and financial services.

The GNFR savings are part of a package of measures to deliver £500m sustainable annual profit uplift by end of year five over and above ‘business as usual’.

A key part of this is reorganising the business to operate as one company, moving to one offer and supply chain organisation, with unified global functions for the first time.

Kingfisher owns Brico Dépôt and Castorama in France, as well as Screwfix and B&Q in the UK. It also has businesses in Poland, Russia, Turkey, Spain, Germany, Romania and Portugal.

“This new organisational structure will enable us to roll out our unified and unique offer over the next five years, a timeframe which will mitigate risk. We have started already by unifying the first 20 categories within our core essentials,” it said.

It has been trialling a unified IT system and now plans to accelerate the roll out to be complete by the end of 2018-19, one year earlier than planned.

The new IT platform involves implementing core e-commerce functionality (including new search, checkout and mobile interfaces) and click and collect ‘same day’ fulfilled from store. Currently ‘next day’ is fulfilled from the national logistics network.

Store closures are another part of the plan – the aim is to close 65 B&Q stores by the end of 2016-17. The first 30 closures have already taken place.

At the same time it is expanding Screwfix. “We continue to review the scale of the UK market opportunity and now believe that there is potential for around 600 outlets versus the 457 today, providing even greater convenience for customers.

Trials of Screwfix in Germany are on track and it opened five outlets last year, as planned, taking the total to nine. The plan is to open a further nine outlets in Germany in the current financial year.

Kingfisher’s sales in the UK rose 5.5 per cent to £4.9 billion, while retail profit was up 18 per cent to £326m.

Total group statutory sales were down 4.8 per cent at £10.4bn, while statutory pre-tax profit was down 20.5 per cent to £512m.

Véronique Laury, chief executive officer, said: “We have delivered solid progress on the first sharp decisions announced last year. I am really pleased with the focus and the energy that the team has demonstrated during the year.

“In addition, in January we revealed our ambition and our five year plan. By putting customer needs first we will, by the end of that period, deliver a £500 million sustainable annual profit uplift, over and above ‘business as usual’. It is an ambitious plan. However based on the solid progress so far, and the competence and enthusiasm of our colleagues, we feel very confident in our ability to deliver.”

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