Morningstar | Garner Set to Take the Reins at No-Moat Kingfisher; Shares Remain Undervalued
No-moat Kingfisher announced on June 26 that Thierry Garner will succeed CEO Veronique Laury by the end of September 2019. We have a favorable opinion of Garner, who has spent the past two decades in senior roles at Carrefour (a French multi-national retailer). His experience leading the Carrefour Asian business since 2012 and specializing in digital and e-commerce sales fits well with the current Kingfisher corporate strategy of shifting to smaller format stores and emphasizing digital channels. However, we maintain our Poor stewardship rating given the One Kingfisher plan has been abandoned. Beyond this, the C-suite remains in further transition after CFO Karen Witts resigned in October 2018 and was replaced by John Wartig on an interim basis, with no permanent replacement named. As such, we will refrain from wavering on our assessment until we learn more about Garner’s potential vision for the business. As a result, we do not intend to alter our long-term sales and profit assumptions of flat sales and 6% operating margins on average over the next five years.Overall, this announcement does not alter our GBX 300 fair value estimate and shares remain undervalued.
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