Kingfisher's first half and management change: What the analysts say

Sir Ian steps down with the group in good shape and incoming CEO Veronique Laury is a strong replacement (with 26 years in the DIY industry, including 13 at Leroy Merlin and 11 at KGF, most recently as CEO of Castorama France). H1 earnings were fractionally ahead of expectations given H1 PBT of £364m, strong cash generation, and reassurance over demand in more recent weeks in Europe. James Grzinic, JefferiesEuropean Retail Team

CEO Ian Cheshire’s announced departure comes when Kingfisher is about to embark on a period of change, in particular the Mr Bricolage acquisition and today’s B&Q recovery plan. In this respect the timing feels appropriate, and Veronique Laury’s c.25 years at Kingfisher and Leroy Merlin will be critical in this next phase where retail execution is key. Near term, sequentially better trading against soft comparatives and resuming the share buyback are balanced by 2-3.5% downgrades from fairly periphery items. B&Q’s journey is a long one but at this stage does not look too painful for P&L or cashflow. Warwick Okines, researach analyst at Deutsche Bank

One of Kingfisher’s problems is that it is very good at persuading itself that it is doing well, even if the external evidence is to the contrary. It is without doubt that the two biggest constituents of the group have major strategic issues to solve: this is a turnaround story, and we would have preferred a new broom. Ms Laury’s appointment is very interesting. Previously she wasn’t on the main board, merely the Group Executive, nor was she even head of France. Her CV reads well of course, but others have tried and failed to bring the disparate parts of Kingfisher together and she has a tough job ahead. A willingness to challenge existing thinking is required, and only the most aggressive strategic actions will sway us from our SELL.  Jonathan Pritchard, analyst at Oriel

Today’s interims are overshadowed by the shock news that the highly respected CEO Ian Cheshire is to retire at year-end (after nearly 7 years in charge at Kingfisher) and be replaced by a relatively unknown Frenchwoman, Veronique Laury, who only recently took over as head of Castorama. Still, France is bigger than the UK for the group, so the decision makes sense and Veronique is very experienced in the French DIY market, having worked for many years at Casto’s great rival Leroy Merlin before joining Kingfisher 11 years ago. Fortunately, Kingfisher has been able to report that H1 profits were held in France despite tough trading and that August saw trading conditions improve a bit. And, thanks to a better performance from the struggling B&Q in the UK, overall group PBT was flat at £364m, very much as expected. Nick Bubb, independent analyst

While there is no denying that sales growth in the UK & Ireland has been strong for Kingfisher over the last six months, these results are up against very weak comparatives with B&Q reporting sales declines for the last four years. This growth was also purely driven by Q1 with sales up 10.4%. However, this does highlight a turning point for the retailer and while slow, some traction should be made over the next six months from the improved housing market and as it develops its offer further. While there will be a transitional period as the new CEO Ms Véronique Laury steps up, given her history with the company, she is a great fit for the role.  CarlySyme, senior retail analyst at Verdict