The Kingfisher share price has been struggling for a number of years. The Screwfix brand and the B&Q operation have performed well, but the businesses in Russia, Romania and France have dragged on the group. At the time of writing, the Kingfisher share price was trading at around 205p.

Can a new CEO improve the group’s fortunes?

Earlier this year it was reported that the CEO, Veronique Lauary, will be stepping down in the autumn. Despite the change in leadership, the company is still determined to hit its target of £500m in savings by 2021. Over the summer, it was announced that Thierry Garnier, the former CEO of Carrefour China, will take over as CEO. 

The company intends to close down 19 stores in Germany, and 15 shops in the UK will also be shut. In the first quarter, the Polish operation saw a 7.4% increase in sales, while the UK and Ireland division registered a 5% rise. The French business posted a 3.4% decline in revenue. 

No doubt Mr Garnier will have ideas of his own about how to turn the company’s fortunes around, and investors will surely be hoping his measures have a positive impact on the Kingfisher share price performance.

Tough economic backdrop weighs on Kingfisher share price

The current economic backdrop in Europe isn’t great, and the UK and Germany saw negative growth in the second quarter. There is chatter that Germany is on the cusp of a recession, while Brexit poses major political and economic uncertainty to the UK and the remainder of the EU. Should there be negative consequences from the situation, the ripple-out effects are likely to be big. 

We have seen consumer activity in the UK cool, even though the jobless rate is at a multi-decade low, and earnings are respectable. The latest Confederation of British Industry realised sales report plunged to -49 – the weakest reading since the credit crisis, and it was the second weakest reading since records began in 1983.

The UK housing market is also slowing down, and in some pockets of the country, prices are falling. Home improvement stores like B&Q tend to perform better in robust housing markets, as property owners are keen to spend money on improvements, with the aim of adding value. The Irish property market is strong, but there are some signs it has come off the boil, and in the event of a no-deal Brexit, the country might be hit hard.

All of these factors are likely to be impacting the Kingfisher share price, which is currently down around 20% since the same time a year ago.

Wider sector struggles to perform

Kingfisher aren’t the only ones finding it tough in the sector. Homebase entered a company voluntary arrangement (CVA) just over one year ago. The CVA included the closure of nearly fifty loss-making stores, and rent was cut at a further 70 outlets. In April 2019, the company said its first-half losses narrowed, and that the turnaround scheme is going well, and the group hopes to be profitable in three years. 

It is possible that some of Kingfisher’s recent success in the UK and Ireland has been down to the failings of Homebase, but the group can’t rely on the underperformance of a major competitor forever.       

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