Kingfisher Q3 sales fall 3.2% in 'disappointing' performance

DIY group Kingfisher reported a “disappointing” 3.2% fall in third quarter sales in softer markets as the company's chief executive said it was suffering from “organisational complexity” that ignored customers.

Total sales fell to down 3.2% to £2.95bn on a constant currency basis. On a like-for-like basis the decrease was 3.7% reflecting continuing disruption from new range implementations, lower promotional activity and ongoing operational challenges in France.

It maintained its forecast for a flat gross margin for 2019-20.

“My early assessment is that we have not found the right balance between getting the benefits of group scale and staying close to local markets. We are suffering from organisational complexity, and we are trying to do too much at once with multiple large-scale initiatives running in parallel,” said chief executive Thierry Garnier, who was brought in to turn the company's fortunes around.

“Altogether, this has brought disruption to sales and has distracted the business from focusing on customers. In addition, we faced softer market conditions in our main markets during the period.”

Like-for-like sales dropped 6.1% in France and were down 1% in the UK and Ireland, where Screwfix provided the only bright spot, with a 3.7% rise on a like-for-like basis.

Kingfisher said initiatives to improve Castorama France's performance were underway, focusing on IT effectiveness and supply chain efficiency.

"This includes stopping or pausing a number of initiatives to concentrate on stabilising performance and trading. The effect of these changes will not be immediate," Garnier said.