The owner of B&Q is pulling out of Russia, Spain and Portugal, affecting 5,000 jobs as the DIY retailer battles against falling sales at its main British and French chains.
Sales at B&Q in the UK and Ireland dropped 2.9% in the three months to 31 October. Trading was worse at the group’s Castorama chain in France; sales falling 7.3% at established stores.
“We are operating in a difficult retail environment. We face challenges and we are addressing them,” said Véronique Laury, the chief executive of B&Q’s owner, Kingfisher.
Moving out of Russia, Spain and Portugal, she said, would allow Kingfisher “to apply our strategy with more focus and efficiency in our main markets where we have, or can reach, a market leading position”.
The withdrawal from Russia is an admission of defeat for Kingfisher, which has ploughed millions of pounds into opening 20 Castorama stores in the country since 2006. The division made an £8m loss last year despite increasing sales.
The group has 28 Brico Dépôt branches in Spain, where it has traded since 2003, and three in Portugal, where it made about a £2m loss, offsetting a £2m profit in Spain.
The company employs 3,000 people in Russia and 2,000 in Spain and Portugal but the stores will continue to trade while it seeks buyers. The process is expected to extend into 2019.
The closures come as the group continues to struggle in the UK. A slowdown in the housing market and low consumer confidence has dampened enthusiasm for home improvement projects. Competition from online specialists has also affected traditional market leaders. Homebase has closed 42 stores this year and Travis Perkins is reviewing its ownership of Wickes.
Kingfisher said about half the 2.9% fall in sales at established B&Q stores in the UK and Ireland was the result of ending bathroom and kitchen installation services. Underlying sales at its Screwfix business rose 4.1%.
The company said in France Castorama had been affected by IT disruption, product and pricing changes introduced as part of the turnaround as well as a weak market. The Brico Dépôt chain in France increased sales by 1.1% at established stores.
Shares in Kingfisher fell 2% in morning trading on Wednesday.
Hannah Thomson, a senior retail analyst at GlobalData, said B&Q had now posted six consecutive quarters of declining sales. “The initial aim of the ONE Kingfisher programme was to deliver an additional £500m of profits after five years. A slow housing market and weak consumer confidence have impacted growth of DIY in the UK, and made it difficult for the programme to succeed,” she said.
She added that Kingfisher had been forced to cut costs to improve profits as sales sagged. It has cut 200 management jobs and ended night shifts.
