Britain's Kingfisher turns to Carrefour veteran to revive fortunes

Britain's Kingfisher turns to Carrefour veteran to revive fortunes
FILE PHOTO: A B&Q store is seen in London March 31, 2015.REUTERS/Stefan Wermuth -
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Stefan Wermuth(Reuters)
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By James Davey

LONDON (Reuters) – British home improvement retailer Kingfisher <KGF.L> has named Thierry Garnier as its new chief executive, hoping the Carrefour veteran <CARR.PA> can revive its fortunes, particularly its struggling French operation.

Kingfisher, whose main businesses are B&Q and Screwfix in Britain and Castorama and Brico Depot in France and elsewhere, is in the fourth year of what was originally a five-year programme to boost earnings.

However, after profits fell in the 2018-19 year, the group said in March it was abandoning its 500-million-pound targeted profit improvement and would part company with Véronique Laury, CEO since 2014.

Last month the group missed forecasts for sales growth in its first quarter, with sales continuing to fall in France – a market that contributed 37% of group revenue in 2018-19.

Shares in Kingfisher, the world’s fourth largest home improvement retailer after Home Depot <HD.N>, Lowe’s <LOW.N>, and Adeo, rose as much as 3.4% on Thursday, reducing year-on-year losses to about 29%.

French national Garnier, 53, who has spent 20 years in senior roles at Carrefour and is currently head of its Asia operations, will join Kingfisher in the autumn, though the date is yet to be finalised. Laury will step down as CEO by the end of September.

“Given the extremely challenged French execution of recent years, the appointment of a French CEO at Kingfisher’s helm was always a more likely outcome,” said analysts at Jefferies.

“We presume Garnier will move rapidly to assess what went wrong (in France) and take corrective action.”

Garnier is a member of the Carrefour group executive committee and has been CEO of Carrefour Asia since 2012, responsible for over 350 stores in China and Taiwan, with 55,000 employees, and gross sales of over 6 billion euros (5 billion pounds).

On Monday Carrefour agreed to sell 80% of its Chinese operations to electronics retailer Suning.com <002024.SZ> for 620 million euros.

EXPERIENCE

Garnier also previously oversaw Carrefour France’s supermarkets and its international operations. In the 1990s he was a civil servant and an advisor at one point to Michel Barnier – currently the European Union’s Brexit negotiator.

“Throughout his career he has led significant businesses through complex change programmes while operating in competitive and rapidly changing retail environments,” said Kingfisher chairman Andy Cosslett.

Analysts highlighted Garnier’s extensive experience in optimising international scale in buying – a key tenet of Kingfisher’s strategy.

Laury’s plan for the group, costing 800 million pounds over five years, involved unifying product ranges across brands, boosting e-commerce and seeking efficiency savings.

Kingfisher said in March that it had reviewed Laury’s strategy and fully supported it, suggesting Garnier’s appointment will mean a review and development of the existing strategy’s execution rather than an overhaul.

However, some analysts have argued the group should be broken up.

While Kingfisher has struggled in France, progress in Britain has been hard won in a market where Australia’s Wesfarmers <WES.AX> came unstuck after a disastrous investment in the Homebase chain.

Kingfisher said Garnier’s remuneration package would be announced when his start date is finalised.

(Reporting by James Davey; editing by Deepa Babington and Susan Fenton)

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