B&Q And Screwfix See Like-For-Like Sales Decline

Kingfisher PLC has published unaudited half year results for the six months ended 31 July 2022. 

Highlights and a summary of Group performance can be found here.

UK & Ireland 

Kingfisher UK & Ireland sales decreased by 9.8% (LFL -11.6%) to £3,221m, reflecting very strong prior year comparatives. 3-year LFL sales were up 16.0% in H1. The LFL sales trend improved from -15.8% in Q1 to -7.1% in Q2, supported by resilient sales from both DIY and DIFM/trade categories and benefiting from more favourable weather. Our banners continued to improve their competitive position in the UK home improvement market, and engagement with new and existing customers remained strong, with both store and online NPS improving on last year. Gross margin % decreased by 200 basis points, reflecting 'normalised' promotional activity versus the prior year, one-off logistics spend to secure and manage seasonal and 'buffer' stock, and mix impacts. Mix impacts are the result of a lower YoY share (versus Screwfix) of B&Q's higher gross margin % revenues given very strong prior year sales; unfavourable B&Q category mix between lower margin building & joinery and EPHC (electricals, plumbing, heating & cooling) and higher margin surface & décor categories, and the success of the kitchen and bathroom & storage categories that attracts higher fulfilment costs.  

Retail profit decreased by 41.3% to £339m (H1 21/22: £579m; H1 19/20: £279m), due to the exceptionally higher sales and gross margin % in H1 last year. Operating costs increased by 3.9%, reflecting higher costs associated with 88 net new store openings (YoY), the normalisation of COVID-related underspend last year, and operating cost inflation including higher utility charges. The increase in operating costs was partially offset by lower staff costs and cost reductions achieved as part of our strategic cost reduction programme. Retail profit margin % decreased by 570 basis points to 10.5% (H1 21/22: 16.2%; H1 19/20: 10.5%).  

B&Q total sales decreased by 12.4% (LFL -13.0%) to £2,082m as the business lapped very strong prior year comparatives. 3-year LFL sales were up 16.7% in H1. The business has achieved good growth across all categories on a 3-year basis, in particular building & joinery and outdoor. In H1 B&Q saw resilient sales in its kitchen and bathroom & storage categories, driven by enhancements in the overall customer journey from design through to installation. LFL sales of weather-related categories decreased by 18% (increase of 23% on a 3-year LFL basis), while LFL sales of non-weather-related categories, including showroom, decreased by 11% (increase of 14% on a 3-year LFL basis). B&Q's total e-commerce sales (including marketplace gross sales) decreased by 17% YoY, largely reflecting strong online trading in the prior year due to the COVID lockdowns in the UK. B&Q's total e-commerce sales were up 149% on a 3-year basis, with e-commerce sales penetration of 11% (H1 21/22: 11%; H1 19/20: 5%). B&Q's marketplace has seen good growth since its launch in March, reaching a penetration of 8% in August 2022 (i.e., B&Q's marketplace gross sales divided by B&Q's total e-commerce sales). B&Q opened one new compact store in H1, bringing its total to 313 stores in the UK and Ireland. 

B&Q's trade-focused banner, TradePoint, continues to perform ahead of expectations as demand from trade customers remains robust. The business remains a significant part of B&Q at 21% of its sales (H1 21/22: 19%). LFL sales for TradePoint outperformed the rest of B&Q, with LFL sales down just 3.1% in H1 and 3-year LFL sales up 34%, as well as low single-digit growth in Q2 despite strong comparatives. Over the last two years, TradePoint has made significant enhancements to its customer proposition, including the addition of more trade-specific product ranges and services (for example, tool hire), trade-only deals and campaigns, and enhancements to its loyalty programme. Strong engagement with trade customers has continued in H1, with the recruitment and retention of members remaining a key area of focus for the business. TradePoint continues to increase awareness of its digital offer through in-store advertising, and is on track to launch a dedicated app in 2023. 

Screwfix total sales decreased by 4.4% (LFL -8.8%) to £1,139m, again reflecting very strong prior year comparatives. 3-year LFL sales were up 14.4% in H1. Screwfix grew its market share in H1, with resilient sales from trade customers throughout the period. Its 3-year LFL performance decreased somewhat from Q1 to Q2, with lower YoY DIY revenues linked to very strong demand in the prior year. Screwfix's e-commerce sales decreased by 17% YoY, largely reflecting strong online trading in the prior year due to the COVID lockdowns in the UK. E-commerce sales were up 144% on a 3-year basis, with e-commerce sales penetration of 60% (H1 21/22: 70%; H1 19/20: 32%). The business has significantly strengthened its digital proposition, with its new mobile app (launched in February 2021) having been downloaded 2.6m times, with 30x faster search results and 6% higher conversion versus the Screwfix website. The app has enabled the rollout of Screwfix 'Sprint', the within one-hour home delivery service, currently available from over 300 stores, covering c.45% of UK postcodes. Further roll-out is planned in H2. 

Space growth contributed c.4% to total sales. In H1, Screwfix opened 31 new stores (including three in Ireland), bringing the total to 821 as of 31 July 2022. The business is on track to reach its goal of over 80 new stores this financial year, and more than 1,000 stores in the medium term in the UK & Ireland. 

 As part of its international expansion plans, Screwfix launched as a pure-play online retailer in France in April 2021. Results have been very encouraging, with strong web traffic and conversion rates, and growing brand awareness across the country. The business is making good progress with building a new supply chain, with its first distribution centre now open, and a strong pipeline of local and national vendors selected and onboarded. In addition, Screwfix is on track to deliver a dedicated IT system for its operations in France. The business expects to open its first stores in France within a few weeks from now, with a meaningful step-up in roll-out targeted in 2023. The results for Screwfix International are captured in 'Other International' - see following story for further information.

Source : Kingfisher PLC

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