Kingfisher CEO Plans for Succession After Three More Years
Kingfisher Plc (KGF) Chief Executive Officer Ian Cheshire named two of his main deputies as potential successors when he relinquishes leadership of the largest U.K. home-improvement retailer in as little as three years.
Kevin O’Byrne, CEO of the B&Q chain, and Finance Director Karen Witts are Cheshire’s preferred internal candidates for a role that he expects to remain in until at least 2016, he said in an interview in London. Euan Sutherland, Kingfisher’s former chief operating officer who left this year to run Co-Operative Group Ltd., is a possible external contender, he also said.
“I know I won’t be running the business in 10 years, but I will be running it in two years,” said 53-year-old Cheshire, who became CEO in 2008 after spending a decade in executive roles at B&Q and the retailer’s international division.
Before handing over the reins, Cheshire has to steer the London-based company through a period of turbulent conditions in its main French and U.K. markets that contributed to a 28 percent decline in first-quarter earnings. His plans may include acquisitions along the lines of last month’s purchase of Bricostore, Romania’s third-largest do-it-yourself chain.
Like all Kingfisher team managers, Cheshire said he must identify at least two internal candidates to succeed him.
O’Byrne, 48, was appointed in October to a new role overseeing B&Q in the U.K. and the Turkish businesses Koctas. The former finance director of Dixons Retail Plc (DXNS) took up his current position at Kingfisher in February 2012 after four years as chief financial officer.
Witts, 50, joined the home-improvement retailer in October, having spent a little more than two years at Vodafone Group Plc as CFO for Africa, Middle East, Asia and Asia-Pacific. Prior to that, she worked for 11 years at BT Group Plc.
The CEO said there are also “a couple of wildcard” possibilities from a younger generation, without naming them.
Cheshire said he’s committed to three more years running the business to complete a strategic plan dubbed “Creating the Leader.” Started in March 2012, the program involves lowering prices, educating shoppers on do-it-yourself projects, adding more own brands and cross-chain ranges and opening stores in new and developing markets such as Russia and China.
“From my point of view, I’m cheerfully turning things down because I want to be here,” said Cheshire, who is also chairman of the British Retail Consortium.
Kingfisher rose 1.5 percent to 351.8 pence at 9:37 a.m. in London trading, the second-biggest gain in the FTSE 100 Index.
The CEO said he is still looking “quite hard” for acquisition opportunities, noting that there are two or three “fault lines developing which means there will some form of exit or consolidation” in coming years.
Praktiker AG (PRA), the German home-improvement retailer that underwent a restructuring last year and is exiting Turkey, will be the “big European story,” with private-equity firms likely to be casting an eye over the business, Cheshire predicted.
Kingfisher would be interested in buying about 15 Praktiker stores in Poland should they become available, he said.
Praktiker’s Turkish business is in “orderly insolvency proceedings” and several parties are interested in individual stores, Harald Guenter, a spokesman for the Kirkel, Germany-based company, said by phone today, declining to comment further on the interested parties. The company is also in advanced talks to sell its Luxembourg stores, though not to Kingfisher, and is exiting Ukraine, the spokesman said. He declined to comment on any other country that Praktiker might exit.
Opportunities may also arise to buy stores in Turkey and Romania owned by the Austrian-based bauMax chain, Cheshire said. Calls to a bauMax spokeswoman weren’t immediately returned.
Cheshire said stores may also become available for purchase in France, where Kingfisher’s Castorama chain leads the market and smaller franchise-based players are struggling with slowing consumer demand and shorter supplier payment terms.
“I think at some point in two years you’ll begin to see bolt-on deals,” the CEO said.
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