ALEX BRUMMER: The pandemic has done B&Q a world of good

Mounting the podium of £1billion profit in British retail is a tough ask, retaining it is even harder. 

Kingfisher’s French boss Thierry Garnier, who has benefited from the pandemic, has joined former Marks & Spencer bosses Rick Greenbury and Stuart Rose and Tesco’s Terry Leahy, Dave Lewis and Ken Murphy.

Pre-pandemic, Kingfisher’s brand of DIY was seen as a busted flush with consumers preferring to bring in tradesman to doing their own botched job.

Revival: Pre-pandemic, Kingfisher’s brand of DIY was seen as a busted flush with consumers preferring to bring in tradesman to doing their own botched job

But all that time spent on furlough, working from home and barring craftsman from visiting the premises did B&Q, its French arms Brico and Castorama and Eastern European operations a world of good.

This didn’t just happen. Garnier, with online experience from China, adapted well. Kingfisher already had a brilliant trade arm in Screwfix, which was an online winner before Garnier’s arrival.

His objective, as he told me, was to achieve the five-minute turnaround for orders.

At B&Q he put internet fulfilment at the heart of the stores and recognised the fastest way of getting items to online customers was delivery directly from shops. 

Having climbed the dizzy heights, it is going to be much harder for Kingfisher to maintain momentum in the current year.

DIY may be back, and muscular once again, but much of what Kingfisher sells, from timber to kitchens, will be impacted by soaring commodity prices and supply bottlenecks, multiplied by Russia’s cruel war on Ukraine. 

There must also be some concern about operations in neighbouring Poland and Romania.

The real enemy will be the pressure on the cost of living for many households.

This is a double-edged sword in that it may put people off employing more expensive professionals to do jobs, but may suppress DIY and home upgrading budgets. 

After the dizzying heights of 2021-22 sales in the first quarter of the current year dropped 8.1 per cent on a same-store basis but are up 16 per cent on two years ago.

There is unlikely to be any repeat this year of the £1billion landmark, and estimates are that profits will fall back to £769million.

This doesn’t look as if it is a Marks and Spencer decline, and if geopolitical uncertainty could be vanquished Kingfisher may eventually clamber up the podium again.

Let’s hear it for the entente cordiale.

Allen key

As chairman of Balfour Beatty, former high-profile ITV boss Charles Allen largely has been out of sight. 

Yet he can take some credit for the way the contracting group navigated Covid, has been generating cash, and has a strong order book of £16billion.

The challenge at The Hut Group, where Allen has been drafted in as non-executive chairman, is of a whole different order.

Founder chairman/chief executive Matt Moulding, for all his entrepreneurial enthusiasm, is in serious difficulty.

The market value of the company is down 80 per cent from the giddy heights of £5.4billion when it launched in very different market conditions 18 months ago. 

Moulding has been beset from the off by governance problems and didn’t win many friends when he suggested he might have done better listing in New York. The jury is very much out on that too, with so many tech and biotech launches on Nasdaq in deep difficulty.

The underlying problems for Moulding are the complicated underpinnings of his enterprise. It has done well to attract big brands to its beauty platform, and sold technology to other retailers including Homebase.

Allen, who brings a strong financial background to the job, should help heal the huge governance deficit, which has been so troublesome, and bring some clarity to how revenues are made.

Success would be to see a volatile share price stabilised, the board further strengthened and an end to untrustworthy, black box accounting.

Electric shock

A shortage of semi-conductors and a European fuel crisis may be hobbling Germany’s native car industry.

Have no fear, it is Elon Musk to the rescue with the first Teslas coming off the production line at Gruenheide in Germany.

At present Tesla lags behind Volkswagen in new orders for electric vehicles.

But for how long?

At full capacity, Tesla will be churning out 500,000 cars a year. That will really frighten the burghers of Wolfsburg.

This post first appeared on Dailymail.co.uk