Hornbach: “There Is Still Very Great Demand At DIY Stores!”

Hornbach has reported on third quarter trading, covering the three months between the 1st September and 30th November, 2020. 

During the second wave of coronavirus infections, consumers are still spending significantly more on improving their homes and renovation projects. This trend, which has continued unabated since the outbreak of the pandemic, is clearly reflected in the latest results of the Hornbach Group (Hornbach Holding AG & Co. KGaA Group). Consolidated sales in the third quarter of 2020/21 (September 1 to November 30, 2020) rose by 20.3% to Euro 1,371.0 million. Even the closure of stores to the general public in Austria and the Czech Republic in October and November 2020 had no noticeably negative impact on the Group’s quarterly figures. The reduction in sales in the regions affected was more than offset by ongoing strong growth in other regions and by the impact of purchases being brought forward or caught up after the measures were lifted. In the first nine months of the current financial year, the Hornbach Group’s sales rose by 20.2% to Euro 4,503.1 million (2019/20: Euro 3,745.3 million). Benefiting also from improved cost ratios, the Group’s earnings for the first nine months of 2020/21 showed sharply disproportionate growth compared with sales. The Hornbach Group’s full-year sales and earnings forecast for 2020/21, which was raised in early November 2020, has been confirmed, and that although the hard lockdown in Germany, Austria, the Netherlands, and Slovakia means that the coronavirus-related risks to the Group’s business performance in the final quarter (December 1, 2020 to February 28, 2021) have risen significantly.

At Hornbach Baumarkt AG, the largest operating subgroup (DIY retail) which operated a total of 161 DIY megastores with garden centers and online shops in nine European countries as of November 30, 2020, net sales grew by 20.7% to Euro 4,224.2 million in the nine-month period (2019/20: Euro 3,499.3 million). On a like-for-like basis and net of currency items, the DIY stores and garden centers generated sales growth of 19.5% (2019/20: plus 7.1%).

Net sales at the HORNBACH DIY stores and online shop in Germany rose by 24.5 % to Euro 2,219.4 million in the first nine months of 2020/21 (2019/20: Euro 1,782.1 million). On a like-for-like basis, sales in Germany grew by 24.6 % (2019/20: 6.2%). In the eight countries outside Germany, net sales rose by 16.7% to Euro 2,004.8 million (2019/20: Euro 1,717.2 million). The international share of sales at the Hornbach Baumarkt AG subgroup therefore amounted to 47.5 % (2019/20: 49.1%). Net of currency items, like-for-like sales in Other European Countries increased by 14.3% (2019/20: 8.1%). Due to the coronavirus pandemic, the online business gained further momentum and grew by around two thirds across the Group in the first nine months of the financial year.

“Compared with other sector players, Hornbach has generated above-average growth in the current year. During the coronavirus crisis it has been more important than ever to provide our customers with the best possible supply based on our closely interlinked stationary and online businesses, also at times when there have been restrictions on sales. We owe this to our employees, who have shown great dedication and impressive success in handling customers’ needs even in the more difficult circumstances due to the pandemic”, comments Erich Harsch, CEO of Hornbach Baumarkt AG.  As a sign of its appreciation, the company has distributed one-off coronavirus bonuses to employees in all regions in the current financial year.  “We are all aware of the great difficulties faced by many businesses and institutions. When making the one-off payments to employees, we explicitly asked them to support companies in their local areas that have been hit hard by the impact of the coronavirus pandemic. Solidarity is more important than ever during this crisis”, he adds.

Disproportionate growth in operating earnings

Together with improved cost ratios, the highly dynamic sales performance in the 2020/21 financial year led to a substantial increase in adjusted EBIT at the Hornbach Group. EBIT adjusted to excluded non-operating earnings items (adjusted EBIT) increased by 59.9% to Euro 66.9 million in the third quarter of 2020/21 (2019/20: Euro 41.8 million) and by 67.2% to Euro 401.5 million in the first nine months of 2020/21 (2019/20: Euro 240.2 million). Nine-month earnings per share grew year-on-year to Euro 13.72 (2019/20: Euro 8.02).

On the level of the Hornbach Baumarkt AG subgroup, nine-month adjusted EBIT rose by 79.2% to Euro 359.8 million in 2020/21 (2019/20: Euro 200.9 million). Earnings per Baumarkt share are reported at Euro 7.50 (2019/2020: Euro 3.72). The Hornbach Immobilien AG subgroup contributed adjusted EBIT of Euro 43.7 million to group earnings (2019/20: Euro 43.1 million).

The Hornbach Baustoff Union GmbH subgroup (HBU), which currently operates 34 builders’ merchant outlets in south-western Germany and two outlets close to the border in France (Lorraine), also reported pleasing growth. Nine-month sales here rose by 13.5% to Euro 277.8 million (2019/20: Euro 244.8 million). HBU generated adjusted EBIT of Euro 10.0 million (2019/20: Euro 5.5 million).

Lockdown has intensified consumers’ basic need to improve their surroundings

“We can count ourselves very lucky with our business performance to date. At the end of the day, this also reflects the marked change in consumer behavior since the onset of the pandemic. Making sure that life in your own four walls is as attractive and safe as possible has become a key focus. There is a great need for DIY products and advice – not just because a tap is dripping or an electric appliance is broken and needs repairing, but because home improvement offers a meaningful occupation when consumers are in crisis mode and have few alternatives available”, explains Albrecht Hornbach, CEO of Hornbach Management AG.

The hard lockdown imposed in Germany and other countries in December had once again clearly revealed people’s great need for DIY. According to Hornbach, the announcement that DIY stores would close to the general public had triggered a wave of last-minute purchases. “We nevertheless expect a backlog of demand to build up in households. Politicians should consider allowing system-relevant DIY stores and garden centers to meet their public supply responsibilities, while complying with the highest safety standards, in the foreseeable future once again”, remarks Albrecht Hornbach.

Source : Hornbach

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