CityBeat: Kingfisher back on course
Glynn Davis looks at the prospects for Kingfisher’s focus on its DIY business
February 13 2003
If things had gone differently Kingfisher would probably now be in the running to buy Safeway. When Asda grabbed the outstretched hand – and a bigger wedge of cash – from Wal-Mart and jilted Kingfisher at the takeover altar it killed off Kingfisher’s aim of being a heavyweight on the European food and general retail scene.
Just before that fateful day I saw a proposed floor plan for a combined Asda/Kingfisher store and I reckon it looked a mighty proposition in the UK market. However, fate decreed that Kingfisher would instead have to undergo a steady retreat from its non-core and low-growth business areas and regroup.
This regrouping has involved it concentrating purely on DIY. And it’s so far, so good for new chief executive Gerry Murphy, who has done well with his initial duties of offloading non-DIY assets. Although what he will be left with won’t quite measure up to what Kingfisher could have been with Asda, it does at least give the company a new shot at attracting a growth rating from the City.
With pretty much no chance in the short term that US giant Home Depot will try and snap up Kingfisher, Murphy has a chance to quietly develop the company’s strong DIY proposition. And in a period of dampened consumer spending he should be able to exert some pressure on the weaker players in the market and give them some grief. Hard evidence of recent progress will be revealed when the group reports Q4 results on February 18.
With the shares at 195.5p near the close of play on Wednesday, they are some way off their 12-month high of 309.5p and nowhere near the heady heights they reached in the days when Asda was almost within its grasp. However, with the wind behind its sails – as well as its sales – and its clear focus on pure DIY, Kingfisher has the opportunity to forget about what might have been.
Glynn Davis was previously a fund manager in the City, and has since become a business journalist specialising in the retail sector. He regularly contributes to national newspapers and specialist trade publications. email glynn@busicomm.fsnet.co.uk
