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Screwfix 'could sit well in French market', says Kingfisher

Kingfisher, Europe's largest home improvement retailer, is considering launching its fast-growing Screwfix operation in France, giving the group a third business in its most profitable market.

Screwfix, supplier of tools, plumbing and electrical equipment to Britain's small tradesmen and serious home improvement enthusiasts, currently trades from 250 outlets in the UK, complementing the group's larger B&Q business.

Although Kingfisher sees scope for up to 420 Screwfix outlets in the UK, opening at a rate of over 50 a year, it is examining other markets for
the catalogue-based format.

"It could sit pretty well in the French market," Kingfisher's Chief Operating Officer Euan Sutherland told Reuters on an analysts' and media visit to Screwfix's huge distribution centre in Stoke-on-Trent, central England.

"The Screwfix model's quite unique and I don't see it replicated anywhere else in Europe, so there's potential to take it out there," he said.
Unlike home improvement rivals, Screwfix's stores display very little stock which customers instead choose from a catalogue. It also sells goods online.

Kingfisher already trades from Castorama and Brico Depot in France, where home improvement is very popular.

"The French trade market's a bit different from the UK trade market so we need to understand a bit more about how that works," said Sutherland.
Last month Kingfisher, which trades from over 900 stores in eight countries in Europe and Asia, missed forecasts for first-half profit, as poor weather in the UK and France dented demand for seasonal items.

"I don't get the sense it's going to be worse (in the UK in the second half) but I don't get the sense it's going to be that much better," said Sutherland.

Britons have been cutting back on non-essential spending as their incomes suffer the worst squeeze for more than 30 years due to higher food and fuel prices, slow wage rises, and increased taxes as a result of government austerity measures.

Screwfix has been a bright spot, growing first-half sales by 9 percent and profit by 19 percent, despite a tough market for smaller tradesmen in the UK.

The business has benefited from the store opening rollout, more direct product sourcing and the success of 'click, pay & collect' and mobile phone services.

With Kingfisher's sales growth coming more quickly from non-store channels the group is investing 60 million pounds ($96.5 million) upgrading its internet platform, utilising Screwfix's capability and experience.

Shares in Kingfisher, down 12 percent over the last six months, closed Friday at 269 pence, valuing the business at 6.4 billion pounds.

Source :James Davey - Reuters

15 October 2012
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