Kingfisher to sell land in bid to stabilise B&Q

B&Q owner Kingfisher today agreed to sell seven stores for £198m (€287.47m) in a bid to provide stability for the ailing DIY giant.

B&Q owner Kingfisher today agreed to sell seven stores for £198m (€287.47m) in a bid to provide stability for the ailing DIY giant.

Shops in Ashford, Bury, Exeter, Glasgow, Grimsby, Lincoln and North Shields, which represent 7% of Kingfisher’s portfolio, will be bought by property firm British Land.

However, as part of the deal, B&Q will lease back the centres and pay rent to the new owners which will be capped and tied in to price inflation.

“I am not a great believer in sale and leaseback deals,” said Richard Ratner, retail analyst at Seymour Pierce.

“But, in the current retail environment, with pressure on prices and increasing costs, this transaction appears to be sensible.

“Kingfisher has strong growth potential, much of which appears to be factored into the current share price, but continues to struggle at B&Q.”

Kingfisher and British Land said in a joint statement: “It will limit B&Q’s rental increases for the stores and protect the business from any increases above the current rate of inflation. It also provides stability and certainty of cashflow for B&Q.”

Kingfisher is the world’s third biggest home improvement retailer boasting 650 stores in 10 countries, but its UK brand B&Q has struggled.

In May the firm said retail profits had slumped in the 13 weeks to April 29 to £21.9m (€31.8m) from £73.7m (€107m) a year earlier.

Its competitors, including Homebase and Wickes, have also felt the pinch as consumers cut back on spending because of spiralling fuel and household costs.

Kingfisher aims to use the cash to invest in stores overseas, where it runs B&Q shops in South Korea, China and Taiwan, as well as the Castorama chain in Russia, France and Italy. The company also said it would look to reduce some of its debts.

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