Business review

A conversation with the executive team

Having transformed Kingfisher into a stronger business, we are now much better placed to accelerate our development and create a truly world-class leader in home improvement retailing.

Peter Hogsted Peter Hogsted Kevin O'Byrne Ian Cheshire Euan Sutherland Philippe Tible

Q

Eastern Europe is growing fast, but is it just a flash in the pan?

A

Peter Hogsted responds:

Absolutely not, these markets are still in their infancy. There are 86 million homes in our market in Poland, Turkey and Russia, and, as wealth levels grow, a high priority for people is to improve their existing homes, catching up with the more developed markets in western Europe. The markets are under-developed in a retail sense with much of the sales still going to generalists and open air markets. We have opened 41 stores in the past three years but there is scope to more than double our stores and establish a multi-channel approach. So I see many years of good growth to come over the longer term. But these things are never an entirely smooth road, you have to be ready for some speed bumps along the way and build flexibility into your plans.

+41

new stores opened in Poland, Russia and Turkey since 2008

Q

China – stay or leave?

A

Peter Hogsted responds:

To be honest I think we need another 12 months before we can know for sure. We now have a terrific local team in place and they have transformed the business from a large loss maker and cash user into one that is capable of making a profit and generating cash. But there is more to be done in China and we will need time to prove our store format is a success with customers to be sure that we have a winning formula. We have learned some important lessons from our experiences and we're determined to get that 'stay or leave' decision right. After all, you don't walk away from a market-leading position in the world's second largest economy, nor commit more shareholder funds lightly.