Kingfisher France: Like-For-Like Sales Up 24.4%

Kingfisher has published interim performance data for the six months ended 31st July 2021.

Group results can be found here.

France

Kingfisher France sales increased by 23.3% (LFL +24.4%) to £2,437 million, with 2-year LFL sales up 17.1%, reflecting strong demand in all categories. A reduction in space following the permanent closure of eight Castorama stores in FY 20/21 impacted total sales by c.-1%. COVID-related restrictions in France led to some temporary store closures throughout the first quarter (and part of the second quarter), impacting total H1 21/22 LFL sales by c.-3%. These trading restrictions mostly impacted Castorama’s larger stores, contributing to Brico Dépôt’s relative outperformance in H1 21/22 (Brico Dépôt’s store estate consists of mainly medium-sized stores, which were not required to close). LFL sales growth also benefited from our decision to gradually open more stores on Sundays, since Q3 20/21, to satisfy higher demand safely.

Our banners continue to improve their competitive position in the French home improvement market. In H1 21/22, Kingfisher France outperformed the market on a 2-year basis (based on Banque de France data), excluding the impacts on trading from COVID-related restrictions in the period.

Gross margin % increased by 80 basis points, largely reflecting positive range initiatives (including higher OEB weighting at Brico Dépôt), supply & logistics efficiencies, and effective management of inflation. This was partially offset by an upweighting of special promotions (arrivages), trading events and category mix.

Retail profit increased by 109.3% to £129 million, reflecting strong growth in gross profit, partially offset by an increase in operating costs of 18.3%. Operating costs increased due to higher costs associated with strong trading, including higher staff costs (headcount and staff incentives) and store-related costs. In addition, H1 20/21 benefitted from COVID-related temporary cost reduction measures (e.g. advertising and marketing) and ‘activité partielle’ relief related to temporary store closures in 2020. The increase in operating costs were partially offset by the annualisation of cost benefits from the permanent closure of eight Castorama stores in FY 20/21.

Castorama total sales increased by 20.3% (LFL +23.1%) to £1,237 million, with 2-year LFL sales up 14.0%. LFL sales of weather-related categories increased by c.23% (increase of c.24% on a 2-year LFL basis), while LFL sales of non-weather-related categories, including showroom, increased by c.23% (increase of c.11% on a 2-year LFL basis). COVID-related restrictions imposed on Castorama’s stores throughout Q1 21/22 (and some of the second quarter) impacted H1 21/22 LFL sales by c.-5%.

Castorama’s e-commerce sales increased by 74% in H1 21/22, representing c.8% of total sales (H1 20/21: 6%; H1 19/20: 2%). 23 Brico Dépôt total sales increased by 26.5% (LFL +25.8%) to £1,200 million, with 2-year LFL sales up 20.5%.

Brico Dépôt’s performance benefitted from being able to keep most of its stores open during the period (except for four stores that were only open to trade customers and for C&C). The upweighting of special promotions (arrivages) is contributing to increased customer engagement and improved price perception. Brico Dépôt’s e-commerce sales increased by 13% in H1 21/22, representing c.6% of total sales (H1 20/21: 7%; H1 19/20: 2%). Brico Dépôt opened two new ‘medium-box’ stores in H1 21/22 (both conversions of  former Castorama stores).

Other International (ex-Russia) total sales increased by 11.1% (LFL +4.7%) to £1,094 million, with 2-year LFL sales up 3.9%, driven by strong growth in Iberia and Romania, partially offset by a decline in Poland due to the impact of temporary store closures. Retail profit decreased by 1.0% to £59 million, 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 H1 20/21 (disposal completed on 30 September 2020), Other International retail profit increased by 6.4%.

Sales in Poland decreased by 0.6% (LFL -5.0%) to £743 million, with 2-year LFL sales down 1.7%. This reflects the impact from the temporary closure of all Castorama stores between 27 March and 3 May 2021, partially offset by the strong recovery seen in Q2 21/22. Temporary store closures had a net impact of c.-9% on H1 21/22 LFL sales. The kitchens category outperformed all categories, supported by the new OEB kitchens range, strong price positioning and the wider project proposition. Space growth contributed c.4% to total sales. LFL sales of weather-related categories decreased by c.4% (increase of c.5% on a 2-year LFL basis) while sales of non-weather-related categories, including showroom, decreased by c.5% (decrease of c.3% on a 2-year LFL basis). Poland’s ecommerce sales continued to grow strongly in H1 21/22, increasing by 35% and representing c.7% of total sales (H1 20/21: 5%; H1 19/20: 2%). Gross margin % increased by 70 basis points, largely reflecting range initiatives and effective management of inflation. Retail profit decreased by 16.1% to £58 million with limited growth in gross profit (impacted by temporary store closures in H1) more than offset by an increase in operating costs of 8.4%. Operating costs increased largely due to space growth and new store opening costs, costs associated with the new Polish retail sales tax (effective from January 2021) and inflation; partially offset by cost savings related to the period of temporary store closures and lower staff bonuses. Five new stores were opened during the period, including two large big-boxes, two medium-boxes and one compact format store.

In Iberia, sales increased by 45.5% (LFL +45.5%) to £196 million, with 2-year LFL sales up 13.0%. This reflects strong demand, in particular in the building & joinery, surfaces & décor and outdoor categories, as well as a recovery in trading following prior year COVID-related temporary store closures in Spain. Retail profit increased to £11m from £1m, reflecting strong growth in gross profit, partially offset by an increase in operating costs of 34.9%. Operating costs increased largely due to higher costs associated with strong trading, and due to H1 20/21 benefitting from COVID-related temporary cost reduction measures and government wage relief.

Romania’s sales and retail loss include one additional month of results (July 2021) in order to facilitate the alignment to Kingfisher’s financial reporting calendar. Sales increased by 47.6% (LFL +19.2%) to £152 million, with 2-year LFL sales up 31.9%, reflecting strong performance in building & joinery, surfaces & décor and outdoor categories. Growth in gross profit was partially offset by higher operating costs, mainly driven by higher staff costs and inflation. As a result, the business reduced its retail loss by 46.3% to £6 million (H1 20/21: £11 million reported retail loss). As previously announced, Kingfisher completed the sale of Castorama Russia on 30 September 2020. H1 21/22 Group sales were impacted by c.-2% as a result of the YoY reduction in space related to Russia.

In Turkey, Kingfisher’s 50% joint venture, Koçtaş, contributed £1 million of retail profit (H1 20/21: nil).

‘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 £5 million 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. Investment in expansion will now be accelerated, and we expect to open Screwfix’s first stores in France in 2022. As announced in March 2021, we signed a franchise agreement with the AlFuttaim Group to expand B&Q into the Middle East. We are on track to open the first two B&Q franchised stores in Saudi Arabia in H2 21/22. The stores and support office functions will be fully operated and staffed by the Al-Futtaim Group.

Download the full results document here

Source : Kingfisher PLC 

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