Kingfisher expands Music Video Club in challenge to WH Smith

KINGFISHER, the B&Q and Woolworths retailer, is expanding its Music Video Club (MVC) chain in a move that could see it move into territory traditionally occupied by WH Smith.

MVC has 47 shops specialising in selling entertainment products to older, "lapsed" music buyers who find superstores such as HMV and Virgin too loud and intimidating. A further 20 branches will open this year.

Kingfisher is also adding a range of 7,000 books to its branch of MVC in Basingstoke, Hampshire, in a trial that could also have implications for WH Smith if extended to the whole portfolio.

MVC has signed up 2.5 million members to its club card which bestows discounts on purchases. The database will be used for marketing purposes. Kingfisher said it had not deliberately targeted Smiths but admitted that it could benefit from Smiths' decision that music was no longer a core activity.

The announcements came as Kingfisher unveiled record results for last year. Profits soared by 34 per cent to pounds 520.5m, helped by a 66 per cent increase in profits at B&Q, the DIY business and good performances from Woolworths and Comet.

Kingfisher shares soared 59p to a new high of 1,037p. The company is now proposing a two-for-one share split to improve liquidity.

Sir Geoff Mulcahy, chief executive, said the group was well placed to build on its good past performance. However, he did warn of a potential consumer slowdown: "There are signs that the five hikes in interest rates could be affecting consumer confidence." Sales growth at Comet has slowed a little in recent months, analysts said.

Sir Geoff announced further trials in home shopping. Woolworths tested a Christmas catalogue in some stores last year and is planning another mail out in spring. A "back to school" catalogue will be launched in the summer. At B&Q, it has set up a centre call centre for kitchen sales. Sir Geoff said Asia was a possible area of future expansion. Its two branches of B&Q in Taiwan are trading well.

In Europe, the group could afford an acquisition of up to pounds 1bn, he said, but added that nothing was on the agenda at the moment.

Investment column, page 24

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