Byggmax Q1 Sales Up 22.9%

Swedish DIY retail group Byggmax has published a trading update covering the first quarter of 2020, advising of a 'strong start to the year'.

During the Covid-19 pandemic our top priority has been health and safety of our colleagues and customers. We have in parallel continued to execute our agenda for profitable growth and experienced unusually strong market growth.

Summary of the first quarter 2020

•  Net sales increased to SEK 879 M (715), representing growth of 22.9 percent.

•  The Group’s like-for-like sales increased 20.7 percent calculated in local currency.

•  The gross margin was 32.7 percent (33.4).

•  EBITA amounted to SEK -51 M (-78), with an EBITA margin of -5.8 percent (-10.9).

•  EBIT amounted to SEK -61 M (-88), with an EBIT margin of -7.0 percent (-12.3).

•  Net loss for the period amounted to SEK -58 M (-81).

•  Earnings per share totaled to a SEK -0.95 (-1.33).

•  Cash flow from operating activities increased to SEK 220 M (-27).

•  The covid -19 virus has tragic and challenging effects on our society, however the financial impact on Byggmax Group in the first quarter has been positive.

•  Byggmax ranked as most sustainable DIY brand in Sweden by Sustainable Brand Index.

Commentary

UNUSUALLY STRONG MARKET GROWTH

The market experienced unusually strong growth in the first quarter and increased well during all months driven by earlier spring weather and likely also the recovered Swedish housing market. The market was further boosted in the second half of March, likely a “stay at home effect” as consumers increased home improvement spend when the Covid-19 pandemic accelerated. There is no public data for the consumer market for building materials. We estimate that the Nordic consumer market for building materials increased strongly in the first quarter, likely around 10–15 percent, with a larger increase for outdoor products.

In the first quarter 2020 Byggmax Group sales increased strongly. The quarterly sales growth of 23 percent was driven by three factors with largely equal impact: good market growth throughout the quarter, own initiatives to drive organic sales, and an additional “stay at home effect” that further boosted demand during the second half of March.

E-commerce continues to be a strength for our Group, and online share of sales amounted to 18 percent. Gross margin for the first quarter amounted to 32.7 percent (33.4). The difference to last year’s all-timehigh level is a result of a product mix with more outdoor products and negative currency effects. Cost control remained strong. As usual, the increase in costs was mainly driven by new stores. The additional cost increase is a result of one-time and ongoing precautions in the Covid-19 situation, and currency effects. EBITA for the first quarter increased strongly, by SEK 27 M to -51 M.

Mattias Ankarberg, President of Byggmax Group, said:

"The Covid-19 virus has tragic and challenging effects on our society. We can however also conclude that the financial impact on Byggmax Group in the first quarter has been positive. Demand for home improvement increased and the disruptions to our operations have so far been manageable.

"Our plans for 2020 largely remain, together with additional measures to strengthen health and safety standards and increase our operational and financial flexibility. We plan to convert a further 15-20 stores to 3.0, grow our e-commerce, add three garden departments and approx. ten new Byggmax stores, of which five of the small format. We expect to end the year with close to 40 percent of Byggmax store portfolio as Store 3.0.

"In the short term, customers will spend more time in their homes. It remains to be seen if this will boost home improvement demand also in coming quarters, or if disruptions will increase. The market situation will vary. Byggmax is well positioned with our upgraded low price concept."

Source : Insight DIY Team and Byggmax

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