Delivering Value,
February 2008 – January 2012


In 2008 we announced our aim to create a step change in shareholder value. The new management team introduced a four year programme of self-help initiatives known as 'Delivering Value' which targeted an improvement in cash returns from every part of the Group. The seven steps that constituted the 'Delivering Value' programme have been a great success during what has been a particularly challenging period for all retailers.

As a result Kingfisher is now a significantly stronger, higher returning business with an improved customer offer. Since the start of 'Delivering Value' (31 January 2008 to 22 March 2012) Kingfisher's stock market valuation has more than doubled from £3.4 billion to £7.2 billion and Total Shareholder Return has been 126.4% (FTSE 100: 16.2%).

A detailed list of the milestones achieved under the seven step plan is listed below but in summary, since the start of the programme in January 2008, we have:

  • Improved our profitability
    • Adjusted pre-tax profit more than doubled, up from £357m in 2007/08 to £807m in 2011/12
    • Retail profit margin up 290bps to 8.1%
    • Grown adjusted basic EPS by 137%
  • Generated higher returns on capital
    • Improved the Group's standard return on capital from 5.8% in 2008/9 to 10.7%, now ahead of the cost of capital
    • 2011/12 Kingfisher Economic Profit of £129m (2007/08: £104m loss)
  • Grown responsibly
    • Made our business more sustainable, CO2 emissions down 25%
    • Helped our customers make their homes more sustainable with sales of 'Eco' products doubling since 2008/09 to £1.4billion
  • Strengthened our foundations
    • Reduced financial net debt from £1.6 billion at reported rates exchange rates to £88 million and improved our credit rating metrics
    • Expanded and modernised the business, investing £1.4 billion to grow and improve our offer for customers, securing better future prospects for our shareholders and employees
    • Developed a high quality direct sourcing capability, growing our annual direct sourced shipments from $821m to $1,456m, now representing around 15% of our total Group sales

Our success is built on the positive engagement of our colleagues right across the Group. Kingfisher today is managed in a more unified way with collective responsibility for our performance. A series of internal networks bring together our international teams to work on common group goals, a new approach known internally as 'One Team'.


Detailed 'Delivering Value' milestones achieved for the four years to January 2012


  • UK & Ireland
  • France
  • Other International
  • Group programmes


1Driving up B&Q UK & Ireland's profit

Milestones achieved

  • B&Q retail profit up 83% despite market decline
  • Retail profit margin up 300bps to 6.2%, on track to achieve a sustainable 7% margin, supported by:
    • Distribution efficiencies
    • Shrinkage reduction
    • More direct sourcing
    • Cost efficiency programme
  • Store estate updated
  • Stringent store standards operating successfully
  • Almost 75% staff achieved retail NVQs or City & Guilds qualifications

Operating margins

Operating margins for 2011/12 (6.2%), 2010/11 (5.6%), 2009/10 (4.9%), 2008/09 (2.8%†) and 2007/08 (3.2%†)

2Exploiting our UK Trade opportunity

Milestones achieved

  • Combined trade sales of over £1bn
  • New trade offer ('TradePoint') added to all B&Q stores, 800,000 trade professionals registered
  • Developed and expanded Screwfix
    • Opened 122 new Screwfix outlets (taking the total to 215)
    • Added specialist trade counters exclusive to plumbers and electricians
    • Group 'centre of excellence' for multi-channel developments
    • Launched a 15 minutes 'click, collect & go' offer

Total trade sales

Total trade sales for 2011/12 (£1082 million), 2010/2011 (£828 million), 2009/2010 (£768 million), 2008/09 (£747 million)

3Expanding our total French business

Milestones achieved

  • Sales up 10%(1) , profits up 42%(1)
  • Retail profit margin up 210bps to 9.5% supported by:
    • Buying optimisation benefits
    • Shrinkage reduction
    • More direct sourcing
  • Added 12% net new space
  • Castorama modernisation accelerated
    • 66% of stores now in modern format, up from 42% in 2007/08
    • Innovative 'Do-it-Smart' programme launched


Total French sales for 2011/12 (£423 million/£4.5 billion), 2010/11 (£353 million/£4.3 billion), 2009/10 (£315 million/£4.1 billion), 2008/09 (£304 million*/£4.2 billion*) and 2007/08 (£298 million*/£4.0 billion*)

4Rolling out in Eastern Europe

Milestones achieved

  • Sales up 71%(1) to £1.7bn(2), profits up 62%(1)
  • Opened 59 net new stores, +85% net new space
    • 25 in Poland, 21 in Turkey and 13 in Russia
  • Opened new distribution facilities in Poland and Turkey to unlock future direct sourcing and distribution benefits


Total Eastern European sales for 2011/12 (£1.7 billion), 2010/11 (£1.6 billion*), 2009/10 (£1.4 billion*), 2008/09 (£1.3 billion) and 2007/08 (£1.0 billion*)

5Turning around B&Q China

Milestones achieved

  • Losses significantly reduced despite lower sales
    • 2008/09: loss of £63m(1)
    • 2011/12: loss of £3m
  • Cash neutral
  • Store portfolio rationalised from 63 to 40 stores, 16 downsized
  • New, smaller format in development


B&Q China profit/(loss) for 2011/12 ((£3 million)), 2010/11 ((£8 million)*), 2009/10 ((£36 million)*) and 2008/09 ((£63 million)*)

6Growing Group sourcing

Milestones achieved

  • Direct sourcing shipments up 77%
  • Established 11 Group-wide common own brands
    • Replacing most of the 150+ local own brands
    • Enabling investment in innovation and prices
  • Invested in sourcing, innovation and brand management design capabilities

Direct shipments (US$m)

Direct shipments (US$m) for 2011/12 (1456), 2010/11 (1318), 2009/10 (794), 2008/09 (696) and 2007/08 (821)

7Reducing working capital

Milestones achieved

  • Reduced working capital by £427 million(3)
  • Average payment terms on direct sourced product extended by 56 days to 90 days

Working capital

Reducing working capital for 2011/12 (-£427m), 2010/11 (-£538m), 2009/10 (-£604m) and 2008/09 (-£180m)

  • (1) constant currencies
  • (2) including 100% of the sales of the Turkey JV
  • (3) excluding £273m negative impact of French LME, the legislative changes shortening French payment terms

Non-financial KPIs

8Engaging our people

Milestones achieved

  • The Gallup Q12 is Kingfisher's established tool for measuring employee engagement across the Group
  • A GrandMean score above 4 out of 5 is 'best in class'

Gallup Q12 staff engagement survey

Gallup Q12 staff engagement survey for 2011/12 (4.3), 2010/11 (4.2), 2009/10 (4.2), 2008/09 (4.0) and 2007/08 (3.8)

9Minimising the impact on the environment

Milestones achieved

  • Helped our customers make their homes more sustainable with sales of 'Eco' products doubling since 2008/09 to £1.4bn
  • Reduced carbon emissions by 25% since 2007/08
  • Awarded Business in the Community's prestigious 'Platinum Plus' standard for leading on sustainability

Eco-product sales
(% contribution to total retail sales)

Eco-product sales (% contribution to total retail sales) for 2011/12 (13%), 2010/11 (11%), 2009/10 (10%) and 2008/09 (7%)

Climate change CO2 emissions from store energy (kg CO2 equivalent per m2 total sales area)

Climate change CO<sub>2</sub> emissions (tonnes/£million retail sales) for 2011/12 (62), 2010/11 (69), 2009/10 (71), 2008/09 (79) and 2007/08 (83)

  • * restated at constant currency
  • ** Poland, Russia, Turkey (100%)
  • † restated to include Ireland

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