Kingfisher Q3: Resilient Demand Against Strong Comparatives

Kingfisher plc has published its Q3 trading update, advising of sales of £3.2 billion; LFL(1) down 2.4% and 2-year LFL(2) up 15.0% 19 November 2021.

Key points

• Strong sales performance from all banners and categories on a 2-year basis, across both retail and trade channels
• Continued market share gains, driven by ongoing delivery against strategic priorities
• Effective management of product availability, logistics and inflation pressures
• Good start to the fourth quarter
• Expect H2 21/22 LFL sales and full year adjusted pre-tax profit to be towards the higher end of previously guided ranges
• Strategic execution and supportive new industry trends provide opportunity for sustained long-term growth
• Commenced £300 million share buyback programme; c.£67 million completed so far 

Unaudited Q3 21/22 sales (three months ended 31 October 2021)

Thierry Garnier, Chief Executive Officer, said: “Kingfisher has delivered another successful quarter, with 2-year LFL sales growth of 15% and strong growth across both retail and trade channels, and across all categories. These are even stronger sales trends given the backdrop of an increasingly ‘normalised’ consumer spending environment. Demand remains supported by what we believe are enduring new industry trends, including more working from home.

“We continue to grow our market share, driven by strong execution of our new strategy. We are pushing forward with investments in key areas of the business to drive long-term growth, including further enhancements to our e-commerce proposition and Screwfix’s launch in France. And we are progressing with our clear plans to deliver on our carbon reduction targets, aligned to 1.5°C to 2025, and to become ‘forest positive’ by the same year.

“Since the start of this year we have maintained, and in many cases improved, our product availability, which is amongst the best in our industry. This has supported our market share gains and allowed us to upweight promotional initiatives in the quarter. We have also continued to manage inflation pressures effectively, while retaining highly competitive pricing.

“We have entered our final quarter with positive momentum and now expect sales and profits to be towards the higher end of our previously guided ranges. Overall, with strong execution and supportive new long-term trends for our industry, we remain confident of continued outperformance of our markets.”

Current trading and outlook
The following guidance applies in the event of no adverse change in COVID-related measures (e.g. new lockdown restrictions resulting in store or showroom closures, or restrictions on entry to stores depending on vaccination status):

• Good start to the fourth quarter, with Q4 21/22 LFL sales (to 13 November) on a 2-year basis up 13.2% (LFL sales up 0.4%)
  
  
• H2 21/22 LFL sales: expect to be towards the higher end of our previously guided range (-7% to -3%; corresponding 2-year LFLs of +9% to +13%)
  
  
• Full year adjusted pre-tax profit: expect to be towards the higher end of our previously guided range (£910 million to £950 million) 

Q3 highlights

Climate change

We continue to deliver against our science-based carbon reduction targets to 2025, which are consistent with reductions required to keep global warming to 1.5°C. Our targets were approved by the Science Based Targets Initiative (SBTi) in June 2021, placing Kingfisher among a very small number of retailers worldwide to have such a commitment.

Through our partnership with the UN’s ‘Race to Zero Retail Breakthroughs’, we participated at the UN Climate Change Conference (COP26) alongside other leading retailers, to share good practices to support more retailers worldwide to take action.

Our targets build on the significant progress being made to cut the environmental footprint of our retail banners and products.  Highlights include:

• B&Q, Screwfix, Castorama France, Brico Dépôt France and Brico Dépôt Iberia all now purchasing 100% low-carbon electricity; 
• A score of ‘A-’ in the latest CDP Climate Change disclosure initiative; 
• Maintaining our ‘AAA’ rating from the MSCI; and 
• B&Q, as the UK’s largest garden centre, working to deliver ‘100% peat-free’ across all compost in 2023.

In addition, in June 2020 we made a new commitment to be forest positive, through ‘creating more forests than we use’, by 2025. Alongside our commitment to ensure all our wood and paper is responsibly sourced by FY 25/26, we are also a founding member of the Rainforest Alliance’s ‘Forest Allies’ initiative, investing in significant reforestation and community forest projects in Indonesia, Peru, Colombia, Guatemala and Cameroon.

Operational status

Kingfisher remains committed to meeting the needs of our customers safely, and ensuring colleague safety and wellness. COVID-related safety measures remain in place in all our stores and locations.

All stores remain open across the Kingfisher Group. In Romania, national restrictions were imposed on 25 October 2021 to limit access to retail stores (except standalone food stores, pharmacies and petrol stations) to customers who can prove (via health certificates) their double-vaccination status or recovery from the virus. As of 16 November 2021, around 35% of the Romanian population is double-vaccinated. The current restrictions are expected to apply at least until the beginning of December 2021. Romania’s Q4 21/22 LFL sales to 13 November(4) are down 11.8% (2-year LFL up 3.9%).

Trading highlights (in constant currencies)

UK & IRELAND
Total sales -1.9% (LFL -3.5%; 2-year LFL +15.7%). Continuing to grow sales ahead of the market with strong engagement from new and existing customers.

B&Q

B&Q sales -5.2%. LFL -5.6% (2-year LFL +17.1%) reflecting resilient demand against the backdrop of very strong prior year comparatives.

− Strong 2-year performance in outdoor, building & joinery and kitchen categories.

− LFL sales of weather-related categories were down 12% (up 28% on a 2-year LFL basis). LFL sales of non-weather-related categories, including showroom, were down 4% (up 14% on a 2-year LFL basis).

− TradePoint, B&Q’s trade-focused banner, continued to outperform, with LFL sales up 5% and 2-year LFL sales up 27%. TradePoint sales were 22% of B&Q sales in Q3. 

− B&Q’s new own exclusive brand (OEB) kitchen range continues to perform well in H2, with a healthy order-book of sales and good take-up of installation services. 

− Opened two new stores in Q3, including one compact store and one further store-instore concession (within an ASDA supermarket).

Screwfix

Screwfix sales +4.0%. LFL +0.2% (2-year LFL +13.0%) reflecting continued strong demand from trade customers.

− During the period, we continued to roll out Screwfix ‘Sprint’, with strong early results. ‘Sprint’ offers customers an industry-leading 60-minute home delivery service (average delivery time c.45 minutes), currently covering one third of the UK population.

− Opened 11 new stores in Q3 in the UK and Republic of Ireland.

Click here to read about Kingfisher's International performance. 

Source : Kingfisher

Image : Chris Warham / shutterstock.com (242222707)

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