Despite solid growth from star brand Screwfix and in growing territory Poland, Kingfisher's H1 2017/2018 financial performance saw sales dip 1.3%.
Kingfisher emphasised it was in Year 2 of its 'ONE Kingfisher' 5 year transformation. It said it was acting on the root causes of 'business disruption' by adapting, including an earlier roll out of a unified IT platform. The group noted it was 'on track to deliver strategic milestones during the re-organisation'.
UK & Ireland: Screwfix & B&Q
16 net new stores helped Screwfix achieve 1.7% profit growth. Total sales grew 18.7% (+11.7% l-f-l) to £727 million, driven by strong growth from the specialist trade desks exclusive to plumbers and electricians, strong digital growth (including mobile +109%; click & collect +47%); and the continued roll out of new outlets. Total Screwfix outlet numbers are now at 533.
Kingfisher UK & Ireland sales were down 0.4% (+1.1% l-f-l) to £2,602 million reflecting the impact of B&Q store closures last year and transformation business disruption, offset by Screwfix's performance and modest price inflation.
B&Q total sales declined 6.3% to £1,875 million reflecting annualisation of the completed store closure programme. LFL sales declined 2.3% after a c.1% benefit from sales transference associated with the store closures. Total online sales grew 17% and now represent 4% of total sales.
France: Castorama & Brico Dépôt
Kingfisher France sales decreased 4.1% (-4.6% l-f-l) to £2,273 million reflecting continuing weaker performance versus the market and the impact of transformation business disruption. According to Banque de France data, sales for the home improvement market were down 0.2%.
Castorama total sales declined 3.1% (-3.5% l-f-l) to £1,255 million. Brico Dépôt total sales declined by 5.4% (-5.9% l-f-l) to £1,018 million.
Poland, Russia, Spain, Turkey & new country development
Other International total sales increased 2.7% (+0.3% l-f-l) to £1,133 million and retail profit increased by 4.7% to £78 million, driven by Poland, where sales were up 5.7% (+3.8% l-f-l) to £694 million.
In Russia sales declined by 4.6% (-9.1% l-f-l) to £196 million. The business delivered a loss of £3 million (2016/17: breakeven reported retail profit) reflecting "weaker sales in a challenging environment".
In Spain sales decreased 4.9% (-3.2% l-f-l) to £169 million, delivering a £4 million retail profit (2016/17: £3 million reported retail profit).
Turkey, Kingfisher’s 50% JV, Koçtaş, contributed retail profit of £3 million (2016/17: £1 million reported retail profit).
New Country Development: Over operations in Romania, Portugal and Germany, sales were £74 million with losses of £10 million (2016/17: £11 million reported retail loss). In August 2017, Kingfisher entered into an acquisition agreement, subject to regulatory approval, to significantly strengthen its position in Romania.
CEO statement
CEO Véronique Laury said: “As planned, this first half has seen a significant increase in the level of transformation activity. Changes are now visible in our stores with new product ranges being well received by customers. We are also changing our ways of working alongside the continued rollout of our unified IT platform. The pace is quick and impactful and is reflected in our performance. We continue to have a flexible approach as our transformation progresses, adapting as necessary, and this will support the significant amount of change planned for the second half and beyond.
“Looking across our markets, we have seen solid growth at Screwfix and Poland, offset by continued weaker sales in France and some business disruption, principally reflecting product availability and clearance. We are aware of and are acting on the causes of this disruption, which we are confident will ease. For the full year, we have self-help plans in place to support our overall performance and remain comfortable with full year profit expectations, though we remain cautious on the second half backdrop in the UK and France.
“We are on track to deliver our full year strategic milestones for the second year in a row. We understand the reality of our customers' lives and are creating a unified and unique offer based on their needs. We are buying as ONE and are starting to see the customer and financial benefits coming through. This is all underpinned by our IT rollout which remains on track, and efficiency benefits which continue to deliver.
“We remain confident in our ability to deliver our five year plan and in the benefits it will generate, supported by our great team of hard-working and enthusiastic colleagues.”
