Kingfisher (UK/France)

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Kingfisher is one of Europe's biggest home improvement retailers, home to B&Q and Castorama among other brands. Those chains are all that remains of what was once an extensive collection of different retail businesses accumulated during the 1990s. A change of strategy in 2001 led to a gradual dismantling of the group as Kingfisher sharpened its focus on the DIY sector. Woolworths was demerged in 2001, and the electrical retail businesses Darty and Comet were spun off in 2003 as Kesa Electricals. The slimmed down Kingfisher is among the top four companies in the global home improvement industry. It was arguably better placed than its American rivals to exploit rapidly expanding developing markets such as China. However expansion beyond Europe met with little success, leaving Kingfisher heavily reliant on its core UK and French markets. Business there remains challenging.

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Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 11th May 2017: Ads of the Week: "Building Stories". Fathers with wayward daughters will almost certainly have had some experience of the dilemma facing the Dad in this charming spot from TBWA Paris for DIY store Castorama. Do you encourage misbehaviour? Or do you wall her up with bread and water until she mends her ways? We know what we'd do, but, well, these guys are French... so what do you expect.

Adbrands Weekly Update 2nd April 2015: Anglo-French DIY group Kingfisher delivered multiple bombshells this week, along with disappointing results for the year to March 2015. The changes included the collapse of its attempts to acquire French rival Mr Bricolage as a result of potential competition issues, the closure of up to 60 of its UK-based B&Q stores and also the departure of B&Q chief executive Kevin O'Byrne. The latter development follows the unveiling of a new strategy to forge closer cooperation between its two main businesses in the UK and France, and the appointment of two French executives linked to Kingfisher's French subsidiary Castorama to lead the combined retail estate. And yet it was Castorama that put the biggest dent in the latest financial results, with revenues and profits both falling, even at constant currency rates, compared to increases in both metrics in the UK. Group revenues slipped 1% to just under £11bn and pretax profits fell 15% to £644m.

Adbrands Weekly Update 18th Sep 2014: Sir Ian Cheshire announced his resignation as CEO of DIY group Kingfisher, owner of the B&Q and Castorama retail chains. He will step down in Jan 2015, to be succeeded by Castorama chief executive Veronique Laury, who will become one of only five women at the head of a FTSE 100 company.

Adbrands Weekly Update 10th Apr 2014: Ads Of The Week: "Unleash the B&Q in You". WCRS makes a strong debut for UK home improvement store B&Q with this oddball comic spot, which comes just in time for the Easter holidays, that traditional start of the amateur DIY season. We like. Separately, parent group Kingfisher was revealed to be in advanced negotiations to acquire its French competitor Mr Bricolage for €275m including debt.

Adbrands Weekly Update 16th Jan 2014: Two of the UK's biggest specialist retailers concluded creative reviews, with Dixons Retail selecting AMV BBDO for the Currys PC World business, while DIY giant B&Q placed its account with WCRS.

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Free for all users | see full profile for current activities: Kingfisher was created in 1982 with the acquisition of Britain's Woolworth chain by property and venture capital group Paternoster. Once a substantial business, Woolworth had experienced a steady decline since the 1960s. A new management team was appointed under chief executive Geoff Mulcahy, who embarked on an ambitious and extensive acquisition spree. Woolworths already owned several additional brands. The most significant of these was DIY chain B&Q. This business had originally been established in a refurbished cinema in the town of Southampton by brothers-in-law Richard Block and David Quayle. Their idea was to launch a warehouse-style DIY superstore along the same lines as US and European competitors. Under their initials B&Q, the business expanded steadily over the next few years. By the end of the 1970s there were 26 stores across the country, mainly in the south. Block had already left the company in the mid-1970s, but Quayle carried on, and eventually sold out to general retailer Woolworths in 1980.

In the following years a series of other companies swelled the size of the business - electrical retailer Comet was acquired in 1984, distributor Entertainment UK in 1986 and healthcare group Superdrug in 1987. Also in 1986, the group fought off a takeover bid from high street rival Dixons (now DSG International). Three years later Woolworth Holdings, which had adopted the new name of Kingfisher, returned the compliment with a hostile bid for Dixons. The latter's shareholders accepted the bid, but it was eventually blocked by regulators on competition grounds.

The 1990s found Kingfisher looking overseas for development possibilities. A joint venture with US superstore Staples led to the launch of Staples UK (sold in 1997), and in 1993 Kingfisher engulfed Darty, France's leading electrical retail group. Further acquisitions followed, including Belgian chain New Vanden Borre, and a 26% stake in French furniture and electrical group BUT. The pace of expansion increased in 1997 with the purchase of Dutch store BCC for £32m, and a move into the German market with the purchase of a 60% stake in Wegert, which simultaneously acquired another chain, Promarkt. In 1998 Kingfisher increased its stake in BUT to 62%, acquired Polish DIY chain Nomi and moved into Asia with the purchase of Singapore-based Electric City, Singapore's largest computer retailer. In September that year, Kingfisher agreed to merge B&Q into a newly created joint venture with French DIY retailer Castorama. By sheer coincidence, French entrepreneur Christian Dubois had opened the first Castorama store in northern France in 1969, the same year that Block and Quayle opened their first B&Q.

Kingfisher's acquisition spree reached its peak in 1999. That year the group announced plans to merge with supermarket group Asda to create what would then have been the UK's second-largest retail group. Rumours of a possible deal had been rumbling on and off for more than a year. Asda chairman Archie Norman had originally worked at Kingfisher under Sir Geoff Mulcahy, and the tie-up would have had enormous benefits for both companies, creating a real force to be reckoned with in the rapidly expanding European hypermarket sector. But Kingfisher's jubilation turned to despair mid-year when US giant Wal-Mart put their hat into the ring, snapping up the supermarket operator for a higher amount.

Never a company to do one deal when it could do ten, Kingfisher turned its attentions instead to the launch of LibertySurf, a free ISP for France, modelled on Dixons' Freeserve spin-off. The service was launched as a joint venture with renowned French dealmaker Bernard Arnault, the chairman of luxury goods business LVMH. Kingfisher and Arnault's private Groupe Arnault each took a 40% stake in the operation, with Kingfisher responsible for marketing through its Darty electrical chain. Expansion through acquisition continued through 1999 and 2000. Castorama snapped up Screwfix, while the electrical group merged its Belgian subsidiary New Vanden Borre with the country's #2 group Hugo Van Praag.

At the start of 2000 Kingfisher was reported to have entered preliminary discussions with German retail giant Metro to explore the benefits of merger. However, the German group had its own internal wrangles to deal with, and the negotiations later stalled. Regardless of its conversations with Metro, Kingfisher dipped a toe into the German market anyway, acquiring a 22.5% stake through Castorama in Virtueller Bau-Markt, the company behind online DIY retailer It also bought the 40% it didn't already own of German group Wegert, which operated 186 electrical stores under the Promarkt or MakroMarkt brands (later sold). Shortly afterwards Kingfisher rolled on into Turkey, taking a 50% stake in the leading Turkish DIY retail chain, Koctas, which became a joint venture with Koc Group, the country's biggest conglomerate.

Yet the loss of Asda, and failure of talks with Metro, seemed to take the wind out of Kingfisher's sails. At the same time the group's share price came under relentless pressure from institutional investors. In 2000, the group announced plans to split itself in two, dividing its DIY/Electrical and General Merchandise divisions into two separate companies. That didn't stop the ongoing acquisition drive. Kingfisher added to its DIY portfolio with a a 60% majority share in Datart, the market leading electrical retailer in the Czech and Slovak Republics. Later that year, the group took advantage of the slump in internet valuations to buy 85% of on-line entertainment retailer Streets Online, for £15.7m. But by early 2001, the group had begun to restructure in preparation of its split into two. LibertySurf was sold to fast-growing pan-Euro ISP Tiscali for a substantial gain, and the Singapore-based Electric City chain to leading Australian electrical retailer Harvey Norman. Pharmacy chain Superdrug was eventually sold to Dutch group Kruidvat at a substantial loss.

After long delays, and a series of disputes over management strategy, the group's general merchandise arm, centred around Woolworth's, was finally demerged in 2001. Later that year, the group acquired a 25% stake in Hornbach, the leading German DIY warehouse chain, with activities also in several other EU countries. Time Retail Finance, a division providing consumer and trade credit facilities for Kingfisher retail companies and several non Group retailers within the UK, was sold to GE Capital Bank in early 2002 for £149m, booking the group a handsome profit. In 2002 the group launched a further radical restructuring, including the departure of Sir Geoffrey Mulcahy.

At the same time Kingfisher announced that it would spin off its electrical retailing business, while also taking full control of the DIY group, offering €5.1bn for the remaining 45% stake held by Castorama's original owner, Francois Dubois. The latter rejected the initial offer as "unsatisfactory", and began an increasingly bitter campaign against any deal. However independent arbitrator Rothschilds agreed that Kingfisher's valuation of the business was fair, and minority shareholders were finally bought out later in the year. The electricals business was demerged as planned in 2003. However Comet failed to survive upheavals in the retail market and later closed. See full profile for current activities

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