Like-For-Like Decline At Kingfisher France

Kingfisher PLC has published unaudited half year results for the six months ended 31 July 2022. 

Highlights and a summary of Group performance can be found here.

Information on UK performance (B&Q and Screwfix) can be found here.

FRANCE 

Kingfisher France sales decreased by 2.6% (LFL -3.0%) to £2,325m, reflecting resilient sales from both DIY and DIFM/trade customers, despite strong prior year comparatives. 3-year LFL sales were up 13.6% in H1. The LFL sales trend improved from -3.7% in Q1 to -2.3% in Q2, driven by an improving sales trend at Brico Dépôt. We continued to improve our competitive position in the French home improvement market. In H1 22/23, Kingfisher France outperformed the market (based on Banque de France data), driven by the outperformance of Castorama which grew three percentage points ahead of the market. Gross margin % decreased by 30 basis points, reflecting category mix impacts and 'normalised' promotional activity versus the prior year, partially offset by lower logistics costs. France will complete its distribution centre space reductions this month, closing a further 8% of space and bringing its cumulative reduction to a c.27% decrease in square metres versus two years ago.

Retail profit increased by 2.4% to £129m (H1 21/22: £129m; H1 19/20: £112m), with lower gross profit YoY more than offset by lower operating costs. Operating costs decreased by 4.5% due to lower staff costs (including the phasing of store staff incentives), lower store property costs, and cost reductions achieved as part of our strategic cost reduction programme. Retail profit margin % improved 30 basis points to 5.6% (H1 21/22: 5.3%; H1 19/20: 5.2%).  

Castorama total sales decreased by 0.4% (LFL -0.5%) to £1,207m, reflecting resilient sales despite strong prior year comparatives. 3-year LFL sales were up 13.4%. The business has achieved strong growth across its outdoor, building & joinery and kitchen categories on a 3-year basis, with each growing by over 20%. In H1 Castorama saw positive YoY sales growth in its building & joinery, kitchen, bathroom & storage and EPHC categories, the latter driven by the unusual heatwave in July. LFL sales of weather-related categories decreased by 2% (increase of 22% on a 3-year LFL basis), while LFL sales of non-weather-related categories, including showroom, were flat YoY (increase of 11% on a 3-year LFL basis). Castorama's e-commerce sales decreased by 38% YoY, largely reflecting strong online trading in the prior year due to COVID-related restrictions in France (which led to some temporary store and non-essential range closures throughout the first quarter and part of the second quarter of 2021). Castorama's e-commerce sales were up 226% on a 3-year basis, with e-commerce sales penetration of 5% (H1 21/22: 8%; H1 19/20: 2%). Castorama opened two new stores in H1, its first high street compact store tests in Paris. Castorama now has 95 stores in total in France.  

Brico Dépôt total sales decreased by 4.9% (LFL -5.5%) to £1,118m, again reflecting resilient sales levels despite strong prior year comparatives. 3-year LFL sales were up 13.8%. The business has achieved strong growth across its outdoor and building & joinery categories on a 3-year basis, with each growing by over 25%. Brico Dépôt continues to drive increased customer engagement and improved price perception, as the business focuses on strengthening its discounter credentials and further differentiating its ranges. Brico Dépôt's e-commerce sales decreased by 34% YoY, again reflecting strong online trading in the prior year. Brico Dépôt's e-commerce sales were up 138% on a 3-year basis, with e-commerce sales penetration of 4% (H1 21/22: 6%; H1 19/20: 2%). 

OTHER INTERNATIONAL 

Other International total sales increased by 20.2% (LFL +19.5%) to £1,263m, with 3-year LFL sales up 24.3%, driven by growth in all key geographies. Retail profit increased by 52% to £87m (H1 21/22: £59m; H1 19/20: £63m), with improved performances in Poland, Romania and Turkey partially offset by a lower retail profit in Iberia and losses incurred in 'Other' operations. The retail profit margin % increased by 140 basis points to 6.8% (H1 21/22: 5.5%; H1 19/20: 5.3%). 

Poland total sales increased by 29.0% (LFL +25.9%) to £913m, supported by strong market share gains, notwithstanding weak prior year comparatives in Q1 due to the COVID-related temporary closure of all Castorama stores (between 27 March and 3 May 2021). 3-year LFL sales were up 23.8% in H1. The business has achieved very strong growth across all categories on a 3-year basis, with building & joinery, kitchen and outdoor all growing by over 30%. The performance of the OEB kitchen range in Poland has demonstrated Kingfisher's ability to capture a new market opportunity with the right combination of offer, price and service, delivering over 90% LFL sales growth in H1 on a 3-year basis and up by over 60% YoY. LFL sales of weather-related categories increased by 26% (increase of 33% on a 3-year LFL basis) while LFL sales of non-weather-related categories, including showroom, increased by 26% (increase of 22% on a 3-year LFL basis). Poland's e-commerce sales decreased by 3% YoY, impacted by the temporary store closures in Q1 last year. Q2 e-commerce sales in Poland increased by 19% YoY. Poland's e-commerce sales were up 330% on a 3-year basis, with e- commerce sales penetration of 5% (H1 21/22: 7%; H1 19/20: 2%). Gross margin % increased by 10 basis points, largely reflecting favourable mix impacts (category and channel mix). Retail profit increased by 66.4% to £94m (H1 21/22: £58m; H1 19/20: £81m) with strong growth in gross profit partially offset by an increase in operating costs. Operating costs increased by 18.1%, reflecting space growth and new store opening costs, higher marketing costs, staff and operating cost inflation, as well as reflecting the reversal of one-off cost savings in H1 21/22 related to the period of temporary store closures. The increase in operating costs was partially offset by cost reductions achieved as part of our strategic cost reduction programme. Retail profit margin % increased by 230 basis points to 10.3% (H1 21/22: 8.0%; H1 19/20: 10.8%). 

Space growth contributed c.3% to total sales. Castorama opened three new stores in H1, including two big-boxes and one compact store (a small retail park store concept test, trading under the Castorama Smart banner), bringing its total to 93 stores in Poland. In August, the business opened its first 500 sqm concept store in Poland, in Warsaw, under the Castorama Express banner. 

Iberia total sales increased by 2.3% (LFL +2.3%) to £196m, reflecting resilient sales against strong prior year comparatives, though impacted by abnormally cold and wet weather during Q1. LFL sales growth improved in Q2 to +4.4%. 3-year LFL sales were up 15.6% in H1. The business has achieved strong growth in most of its categories on a 3-year basis, with building & joinery, EPHC, kitchen, surfaces & décor and outdoor all growing by double-digit percentages. Retail profit decreased to £6m from £11m (H1 19/20: £2m), reflecting a lower gross margin % and an increase in operating costs of 2.0%. 

Romania total sales decreased by 1.8% to £145m, reflecting the inclusion of one additional month of sales in the prior year comparative. On an LFL basis sales growth was +8.9%, reflecting strong YoY performances in its building & joinery, kitchen, surfaces & décor and outdoor categories. This was despite the impact of COVID-related trading restrictions earlier in the year (lifted in March 2022). Growth in gross profit was partially offset by an increase in operating costs of 4.5%, mainly driven by staff costs and inflation. As a result, the business reduced its retail loss by 23.3% to £4m (H1 21/22: £6m retail loss; H1 19/20: £12m retail loss). On a comparable basis, excluding losses incurred in the month of January 2021, Romania's retail loss increased by 3.6% YoY. 

In Turkey, Kingfisher's 50% joint venture, Koçtaş, continues to grow successfully in a challenging economy. The business contributed £4m of retail profit in the period (H1 21/22: £1m; H1 19/20 £3m), benefiting from strong customer demand in H1, partly due to the expectation of higher inflation. The business recently opened its 300^th store, on its way to a target of over 500 stores in 2023. 

'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 £13m was incurred as they scale up for growth. In November 2020, Kingfisher acquired NeedHelp, one of Europe's leading home improvement services marketplaces. As noted in the UK & Ireland commentary above, Screwfix launched in France as a pure-play online retailer in April 2021 with very encouraging results, and expects to open its first stores in France soon. Earlier this year we opened our first franchise store under the B&Q banner in the Middle East, with a further store opening in May. The stores and support office functions are fully operated and staffed by the Al-Futtaim Group.

Source : Kingfisher PLC

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