Kingfisher provides an update on COVID-19 pandemic
Published: 16 March 2020 - John King
Kingfisher has provided an update on the impact of the COVID-19 pandemic on its business, along with the measures it is taking to actively manage the risks to its customers, colleagues and operations.
Thierry Garnier, CEO of Kingfisher said: "We are committed to supporting local authorities and governments to limit the spread of the virus, and the health and safety of our colleagues and customers remains our top priority. Our teams are also evaluating the best ways to satisfy emergency needs in our markets, particularly for electricity, heating and plumbing.
"While significant uncertainty exists around the impact of COVID-19, we are taking immediate and significant measures to contain our costs and protect our financial position. We have a strong balance sheet, with significant liquidity headroom and limited financial debt."
Following the outbreak in Asia, the fompany formed a central committee to monitor and manage risks. It also established committees in all its retail businesses. These committees continue to monitor closely the impact on all areas of our business, as well as ensuring publicly available advice is followed and that appropriate safeguards are quickly implemented. From the start of the outbreak, the company has taken measures to protect its colleagues and customers, to limit the impact on profitability and to preserve financial flexibility.
Colleagues and customers
Kingfisher has implemented a series of actions to protect the health and safety of our employees, including restricting travel and meetings, the adoption of flexible working arrangements for colleagues, and the recommendation to colleagues and customers to follow specific health protection protocols. Contingency plans have been drawn up to ensure continuity of customer service in stores and in head offices, including encouraging work from home where appropriate.
Supply chain and availability
The Company has global sourcing offices in China, other Asian countries and Europe. Approximately 25% of its total annual cost of goods sold (COGS) are directly sourced from the Far East. We also source from Eastern and Western Europe, including Italy (c.4% of COGS), as part of our supply chain.
In China, over 95% of our vendors' factories have reopened, with capacity starting to rebuild. In addition, approximately two thirds of our outdoor and seasonal product orders were shipped before Chinese New Year. At this moment over 85% of placed orders have a less than four-week delay against their original schedule. In Italy, while nearly all of our vendor factories remain open to date, uncertainty remains over how goods can be transported from the region.
Sales and demand
Up to Saturday 14 March we have experienced no impact on demand from COVID-19. In February 2020, Group LFL sales were +7.6%, or +2.3% excluding the leap year impact. In the first two weeks of this month (up to and including Saturday 14 March) Group LFL sales continued to be positive, with growth across all businesses within our core markets, strongly supported by e-commerce sales.
However, there is significant uncertainty on sales and demand as the outbreak spreads, and as central governments and businesses take action to contain and delay its impact.
Following the announcement by the French government on Saturday 14 March to close all non-essential places used by the public, effective from midnight on Sunday 15 March, all 221 of Kingfisher's Castorama and Brico Dépôt stores in France have closed until and including Tuesday 14 April.
In addition, all 28 stores in Spain have also closed until and including Sunday 29 March, following the government's declaration of a two-week state of emergency.
Kingfisher's remaining 1,100+ stores across the United Kingdom, Ireland, Poland, Romania, Portugal and Russia remain open.