Good Like-For-Like Growth For Kingfisher's International Business

Kingfisher has published full-year results for the year ended 31st January 2022, advising of a record year for profits and revenue. 

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Other International

Other International (ex-Russia) total sales increased by 10.3% (LFL +5.5%) to £2,180m, with 2-year LFL sales up 9.2%, driven by growth in all key geographies. Retail profit increased by 1.0% to £133m, with improved performances in Iberia, Romania and Turkey offset by a lower retail profit in Poland and losses incurred in ‘Other’ operations. Including Russia’s retail loss in FY 20/21 (disposal completed on 30 September 2020), Other International retail profit increased by 2.1% and the retail profit margin % was broadly flat at 6.1%.

Sales in Poland increased by 5.0% (LFL +0.3%) to £1,525m, with 2-year LFL sales up 5.3%. Space growth contributed c.5% to total sales. Most categories traded well on a 2-year basis, in particular kitchens (up 41%) with the new OEB kitchen range landing well. We saw a strong recovery in demand from Q2 21/22 onwards following the closure of all Castorama stores between 27 March and 3 May 2021. These temporary store closures had a net impact of c.-6% on FY 21/22 LFL sales.

LFL sales of weather-related categories increased by 1% (increase of 11% on a 2-year LFL basis) while sales of nonweather-related categories, including showroom, were broadly flat (increase of 4% on a 2-year LFL basis).

Poland’s e-commerce sales continued to grow strongly in FY 21/22, increasing by 39% (up 276% on a 2-year basis), representing c.5% of total sales (FY 20/21: 4%; FY 19/20: 2%).

Gross margin % increased by 50 basis points, largely reflecting our effective management of inflation. Retail profit decreased by 1.5% to £135m with growth in gross profit (impacted by temporary store closures in H1) more than offset by an increase in operating costs of 10.0%. Operating costs increased largely due to space growth and new store opening costs, staff costs (annualisation of COVID-related employment support received in the prior year), costs associated with the new Polish retail sales tax (effective from January 2021) and inflation. The increase in operating costs was partially offset by cost savings related to the period of temporary store closures and cost reductions achieved as part of our strategic cost reduction programme. A record of seven new stores were opened in the year, including three big-boxes, two medium-boxes and two compact format stores.

In Iberia, sales increased by 23.2% (LFL +23.2%) to £366m, with 2-year LFL sales up 14.6%. This reflects strong demand, with double-digit LFL sales growth in all categories. Retail profit increased to £12m from £3m, reflecting strong growth in gross profit, partially offset by an increase in operating costs of 19.6%.

Romania’s total sales and retail loss include one additional month of results (January 2022) in order to facilitate the alignment to Kingfisher’s financial reporting calendar. Sales increased by 22.8% (LFL +15.0%) to £279m, with 2-year LFL sales up 28.0%, reflecting strong demand despite the impact of COVID-related trading restrictions, particularly in H2. Growth in gross profit was partially offset by higher operating costs, mainly driven by inflation, staff costs and higher costs associated with strong trading. As a result, the business reduced its retail loss by 16.4% to £11m (FY 20/21: £14m reported retail loss; FY 19/20: £23m reported retail loss). On a comparable basis, excluding losses incurred in the additional month of January 2022, the retail loss would have been £8m, a c.35% reduction from FY 20/21.

As previously announced, Kingfisher completed the sale of Castorama Russia on 30 September 2020. FY 21/22 Group sales were impacted by c.-1.5% from the YoY reduction in space related to Russia.

In Turkey, Kingfisher’s 50% joint venture, Koçtaş, contributed £7m of retail profit (FY 20/21: £9m) despite a high inflation environment and temporary closure of all stores on weekends in H1 21/22 due to COVID-related restrictions.

‘Other’ consists of the consolidated results of NeedHelp, Screwfix International, and franchise agreements. Due to these businesses being in their early investment phase, a combined retail loss of £10m was incurred as they scale up for growth. In November 2020, Kingfisher acquired NeedHelp, one of Europe’s leading home improvement services marketplaces. As part of its broader international expansion plans, Screwfix launched in France as a pure-play online retailer in April 2021, and expects to open its first stores in France in H2 22/23. Following the year-end, we opened our first franchise store under the B&Q banner in the Middle East in February 2022, with one further store due to open in Q2 22/23. The stores and support office functions are fully operated and staffed by the Al-Futtaim Group.

Source : Kingfisher

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