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By Malcolm Stacey | Saturday 15 July 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Hello Share Tickers. Shares in Kingfisher (KGF) have taken a pounding since the end of May. But the current share price of 295p, down from 368p then, may be worth more in my opinion.
Morgan Stanley takes a similar view of the prospects of this huge home improvement operation. It’s upped its recommendation from underweight to overweight and its target from 290p. to 380p
To take just one example, the company’s Screwfix arm seems pretty popular. Kingfisher also owns a lot of freehold buildings. It has £600 million in cold cash, and unlike lot of big firms, its pension set-up is in profit.
It operates 1200 stores, many of them in 10 countries in Europe. So the falling pound won’t do any damage. It employs 77,000 souls and takes money from 6 million customers each week
Kingfisher has a fairly new chief executive in Véronique Laury. She and the board decided that they needed a big transformation to make the most out of the market
The overriding decision was to introduce the Kingfisher One plan, standardising its different arms to cut costs and improve efficiency. The team is also working on the principal that needs of different countries are more similar than different. Which any regular shopper abroad already knows.
Kingfisher is also working hard to improve the design, engineering and packaging of its products. Where possible, the same stuff will be sold in all their stores.
The Kingfisher One operation was actually announced in January 2016, but such a major reorganisation takes time and the results are yet to really manifest themselves
In Britain, house prices are falling and new homes are not being built as quickly as they should be. This usually means that more money is spent on DIY and improvements to customers’ present homes. I posit therefore that the share price is set to rise.
As many of us do in the Punter’s Return. God bless.
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