B&Q to franchise stores

Published:  04 October, 2010

NEW YORK: B&Q plans to franchise new stores in a bid to speed expansion.

B&Q owner Kingfisher, which also owns Castorama in France and has major operations in China and Poland, is looking at licensing its brands for use in new territories, reports the Independent newspaper.

Initially it will seek franchisees in smaller territories without stores, such as Balkan and Baltic states. Kingfisher currently directly operates all its 837 stores in the eight countries where it trades.

The franchise model is one of several initiatives under discussion at the company for its long-term growth strategy due to be announced next spring.

Ian Cheshire, the chief executive, is halfway through a three-year efficiency drive that has helped push last year's interim pre-tax profits up 22% despite stagnant revenues.

Strategy beyond 2012 was a theme of the investor road show in New York last week. Around half Kingfisher's shareholders are in the US - one of the highest ratios among FTSE 100 companies.

Mr Cheshire told investors that innovative new products and extra services could provide a growth stimulus when the present programme draws to a close. Expansion into new geographical markets is likely to be a key plank of the future strategy.

The development of franchising has been made possible because Kingfisher has revamped its supply chain, pooling purchasing across its operations. Already, many of the same products are available at Castorama, B&Q and its other international operations, and the company is rolling out ten own-brand labels, from Mac-Allister power tools to Blooma garden furniture, whose multilingual packaging will mean products can be sold throughout the Kingfisher store network, including by franchisees.

Mr Cheshire said Kingfisher can now "say to a potential franchisee that we could supply them, not with everything, but with 40% of what they need".

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