B&Q owner Kingfisher plans DIY franchise roll-out in quest for global growth

(Bloomberg)

Kingfisher, the DIY retailer which owns B&Q, is seeking local partners to take on franchises in a bid to speed up an international expansion drive.

The company, 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, as it seeks to enhance its international footprint.

It is expected to search initially for franchisees in smaller territories where its stores are not yet represented, such as Balkan and Baltic states. Kingfisher currently operates all of its 837 stores directly, across eight countries.

The development of a franchise model is one of a number of initiatives under discussion at the company, as management prepares to unveil a new long-term growth strategy next spring. Under Ian Cheshire, the chief executive, it is halfway through a three-year efficiency drive which last month helped push interim pre-tax profits up 22 per cent, despite stagnant revenues.

The issue of strategy "beyond 2012" was a theme of an investor roadshow 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 such as decorators and handymen, could provide a leg-up to growth when the present programme draws to a close.

Expansion into new geographical markets is also likely to be a key pledge when the future strategy emerges alongside full-year results next March.

The development of franchising has been made possible because King-fisher 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 per cent of what they need".