Kingfisher finds supply chain savings

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Action to cut supply chain costs has helped DIY group Kingfisher improve its first half profits despite the weak market. Group brands include B&Q, Screwfix, Brico Depot, and Castorama.

At B&Q, it said the closure of one of four distribution centres had resulted in a gross margin benefit of 20 basis points (0.2 per cent). Reduction in shrinkage had resulted in a gross margin benefit of a further 30 basis points (0.3 per cent).

Introduction of 60 double deck trailers to the distribution fleet had also contributed to a one per cent reduction in operating costs.  In the second half it plans to introduce another 60 double deckers to the fleet with the aim of reducing overall operating costs by one per cent year on year.

The group is also working at increasing the level of group sourcing. It said B&Q and Castorama France were progressing well with coordinating more direct sourced ranges for 2010. For example, some “25 per cent of next year’s outdoor leisure range will be the same where previously there was no commonality”.

Improving working capital has also been a priority. In the first half, average stock days at B&Q UK & Ireland were running at nine days lower while product availability for customers reached record levels, it said.

The supply chain improvements are part of a package of measures and overall the group saw pre-tax profit rise 35 per cent to £288m on sales up seven per cent to £5.1bn.

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