By Mark Potter
WARSAW, Nov 2 (Reuters) - Kingfisher, Europe's top home improvement retailer, plans to double its Polish business over five years, saying the return of over a million migrants will help limit the impact of a global recession there.
The British firm said it was aiming to have 100 of its Castorama and building trade-focused Brico Depot stores in central Europe's biggest economy, up from 48.
Chief Executive Ian Cheshire said Poland would not be immune to a looming global recession, but that a young population, demand for new housing and rising wages would ensure the country outperformed Kingfisher's main UK and French markets.
'Even though we don't expect it will escape the recession ... I am absolutely convinced that it will perform better than France, which will probably perform better than the UK,' he said on a media trip to Warsaw to its largest store by sales volume worldwide.
He said business would also be helped by the return of many of the 1.5 million young Poles who have emigrated in recent years -- many of them to Britain -- as they look to set up family.
'The Polish builder is now back here and building his own house and flat,' Cheshire said.
Pawel Walus, Castorama Poland operations director, said 80 percent of migrants were expected to return following a strengthening in the Polish zloty and a rise in local wages.
Poland has been a rare bright spot for Kingfisher in recent years, as it battles a slowdown in consumer spending and a plunging housing market in Britain, a more modest consumer downturn in France and government curbs on building in China.
Its Polish business accounted for 65 million pounds ($106 million), or 23 percent, of group trading profit in the 26 weeks to Aug. 2, with like-for-like sales up 11.6 percent.
But in recent weeks the country has been swept up in a loss of investor confidence in emerging markets, even though it does not have the level of foreign borrowing of troubled nearby countries like Hungary and has a large internal market.
KEY INVESTMENT TARGET
'I fully expect tough times, and particularly with Poland's markets being driven by investment from outside ... that must slow down. But it's still got a lot of catching up to do and a lot of growth in real wages yet to come,' Cheshire said.
He said the Polish do-it-yourself retail market was still fairly immature, and so the business would be able to thrive by expanding -- like its B&Q arm did in Britain during the mid 1990s -- even if trade got tougher.
Kingfisher was also confident of continuing to take market share from rivals such as France's Leroy Merlin and Germany's OBI, both privately owned, as well as Germany's Praktiker, through its focus on low prices, stock availability and own-brand products such as Colours paint, Cheshire said.
He declined to say how much the expansion plan would cost, but said the rough cost of a new store in Poland was about 10 million euros ($12.8 million).
'This is absolutely one of our key investment targets,' he said, adding that if he needed to cut capital spending, it would be in other parts of the business before Poland.
Cheshire said Kingfisher, the world's number three home improvement retailer behind U.S groups Lowe's and Home Depot, would continue its expansion into Russia and look in future at entering into Lithuania and Ukraine.
The group, which runs over 800 stores in eight countries, would look at a franchise model for smaller neighbouring countries and for possible future expansion into India.
'One of the problems Kingfisher has had is it's got massive amounts of capital tied up, particularly in property.'
'If we could find somewhere a model, at least in some countries, which is more like the hotel model, where someone else owns the heavy assets ... it's definitely a opportunity for us to generate better returns,' Cheshire said.
For an interview with Ian Cheshire click on
(Editing by Jason Neely) ($1=.6146 Pound) ($1=.7826 Euro) Keywords: KINGFISHER POLAND/ (mark.r.potter@thomsonreuters.com; +44 20 7542-2943; Reuters Messaging: mark.potter.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
WARSAW, Nov 2 (Reuters) - Kingfisher, Europe's top home improvement retailer, plans to double its Polish business over five years, saying the return of over a million migrants will help limit the impact of a global recession there.
The British firm said it was aiming to have 100 of its Castorama and building trade-focused Brico Depot stores in central Europe's biggest economy, up from 48.
Chief Executive Ian Cheshire said Poland would not be immune to a looming global recession, but that a young population, demand for new housing and rising wages would ensure the country outperformed Kingfisher's main UK and French markets.
'Even though we don't expect it will escape the recession ... I am absolutely convinced that it will perform better than France, which will probably perform better than the UK,' he said on a media trip to Warsaw to its largest store by sales volume worldwide.
He said business would also be helped by the return of many of the 1.5 million young Poles who have emigrated in recent years -- many of them to Britain -- as they look to set up family.
'The Polish builder is now back here and building his own house and flat,' Cheshire said.
Pawel Walus, Castorama Poland operations director, said 80 percent of migrants were expected to return following a strengthening in the Polish zloty and a rise in local wages.
Poland has been a rare bright spot for Kingfisher in recent years, as it battles a slowdown in consumer spending and a plunging housing market in Britain, a more modest consumer downturn in France and government curbs on building in China.
Its Polish business accounted for 65 million pounds ($106 million), or 23 percent, of group trading profit in the 26 weeks to Aug. 2, with like-for-like sales up 11.6 percent.
But in recent weeks the country has been swept up in a loss of investor confidence in emerging markets, even though it does not have the level of foreign borrowing of troubled nearby countries like Hungary and has a large internal market.
KEY INVESTMENT TARGET
'I fully expect tough times, and particularly with Poland's markets being driven by investment from outside ... that must slow down. But it's still got a lot of catching up to do and a lot of growth in real wages yet to come,' Cheshire said.
He said the Polish do-it-yourself retail market was still fairly immature, and so the business would be able to thrive by expanding -- like its B&Q arm did in Britain during the mid 1990s -- even if trade got tougher.
Kingfisher was also confident of continuing to take market share from rivals such as France's Leroy Merlin and Germany's OBI, both privately owned, as well as Germany's Praktiker, through its focus on low prices, stock availability and own-brand products such as Colours paint, Cheshire said.
He declined to say how much the expansion plan would cost, but said the rough cost of a new store in Poland was about 10 million euros ($12.8 million).
'This is absolutely one of our key investment targets,' he said, adding that if he needed to cut capital spending, it would be in other parts of the business before Poland.
Cheshire said Kingfisher, the world's number three home improvement retailer behind U.S groups Lowe's and Home Depot, would continue its expansion into Russia and look in future at entering into Lithuania and Ukraine.
The group, which runs over 800 stores in eight countries, would look at a franchise model for smaller neighbouring countries and for possible future expansion into India.
'One of the problems Kingfisher has had is it's got massive amounts of capital tied up, particularly in property.'
'If we could find somewhere a model, at least in some countries, which is more like the hotel model, where someone else owns the heavy assets ... it's definitely a opportunity for us to generate better returns,' Cheshire said.
For an interview with Ian Cheshire click on
(Editing by Jason Neely) ($1=.6146 Pound) ($1=.7826 Euro) Keywords: KINGFISHER POLAND/ (mark.r.potter@thomsonreuters.com; +44 20 7542-2943; Reuters Messaging: mark.potter.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.