TIDMKGF
RNS Number : 4099H
Kingfisher PLC
24 November 2022
Q3 trading update to 31 October 2022
Resilient sales trends continue; Q3 total sales growth +1.7%
3-year LFL +15.3%
24 November 2022: Kingfisher plc ('Company', 'Group' or
'Kingfisher') is today providing its Q3 22/23 sales.
Key points
-- Third quarter sales of GBP3.3bn; total sales +1.7% in constant currency and LFL +0.2%
-- Sales significantly ahead of pre-pandemic performance (3-year
LFL +15.3%), supported by continued market share gains
-- Good start to trading in the fourth quarter with 3-year LFL +
16.2 % and LFL +2.8 % for the three weeks to 19 November 2022
-- Strong energy efficiency product demand supporting DIY sales
-- Trade customers continuing to see robust pipelines; strong
TradePoint performance (LFL +1.9% and 3-year LFL +29.5%), and
Screwfix gaining significant market share in the UK
-- Opened first two Screwfix store s in France; meaningful
step-up in store roll-outs planned for 2023
-- Strong omni-channel engagement with e-commerce sales 3-year
growth of +138 % (YoY growth of +2.3%) ; representing 16 % of Group
sales (Q3 19/20: 8 % ). Continued growth of B&Q marketplace in
Q3, and successful marketplace launches in Spain and Portugal
-- Continuing to deliver value to customers whilst managing inflation pressures effectively
-- Good product availability and effective supply chain management
-- Anticipate FY 22/23 adjusted pre-tax profit in the range of c.GBP730m to GBP760m(1)
Unaudited Q3 22/23 sales (three months ended 31 October
2022)
Sales % Total % Total % LFL % 3-year LFL
2022/23 Change Change Change( (2) () Change( (3) ()
------------------------- --------- --------- ------------------ ------------------ ------------------
GBPm Reported Constant currency Constant currency Constant currency
UK & Ireland 1,545 +0.1% +0.1% ( 2.3 )% +12.9 %
- B&Q 935 ( 2.8 )% ( 2.7 )% ( 3.5 )% +13.1 %
- Screwfix 610 +4.8% +4.9% ( 0.5 )% +12.4 %
France 1,097 ( 1.2 )% +0.6% +0.5% +14.6 %
- Castorama 564 ( 0.9 )% +0.8% +0.8% +16.6 %
- Brico Dépôt 533 ( 1.5 )% +0.2% +0.2% +12.7 %
Other International 621 + 5.1 % +8.4 % +6.7 % +23.1 %
- Poland 447 + 6.6 % +10.5 % +7.6 % +21.3 %
- Iberia( (4) () 91 +1.6% +3.4% +3.4% +19.8 %
- Romania 80 +2.3% +4.2% +4.2 % +34.6 %
- Other( (5) () 3 n/a n/a n/a n/a
Total Group 3,263 +0.6% +1.7% +0.2% +15.3 %
------------------------- --------- --------- ------------------ ------------------ ------------------
Thierry Garnier, Chief Executive Officer, said:
"Our sales trends continued to be resilient, with like-for-like
sales 15.3% ahead of pre-pandemic levels in the quarter. This was
supported by continued market share growth, including strong gains
at Screwfix, TradePoint and Castorama Poland. While the market
backdrop remains challenging, DIY sales continue to be supported by
new industry trends such as more working from home and a clear
step-up in customer investment in energy saving and efficiency.
DIFM and trade activity also continues to be well supported by
robust pipelines for home improvement work.
"Competitive pricing remains a priority. With our customers
facing rising living costs, we are determined to make home
improvement affordable and accessible - particularly through our
own exclusive brands which represent 45% of our sales.
"We continue to execute our strategy at pace, and to invest for
growth. Last month marked a key moment in our history with the
opening of our first Screwfix store in France, with a total of four
to five stores due to open this financial year and many more
planned for 2023. We launched our e-commerce marketplace in Spain
and Portugal, building upon the early success of B&Q's
marketplace in the UK. We have also launched energy-saving tools in
the UK and France, to help customers diagnose and access products
and services to increase the efficiency of their homes ahead of the
winter. We have seen a very positive take-up of these services so
far, with B&Q, for example, taking nearly 1,000 appointment
bookings within the first three days of launch.
"While we continue to be vigilant against macroeconomic
uncertainty, we remain confident in both the resilience of our
industry and in continuing to grow ahead of our markets."
Current trading and outlook
The fourth quarter has started well, with good trading momentum.
For the three weeks to 19 November 2022(6) LFL sales were +2.8 %
and + 16.2 % on a 3-year basis. Sales remain resilient across our
customer segments (DIY and DIFM/trade) and banners, with ongoing
strength in energy efficiency product sales and demand from the
trade segment.
Looking ahead, we remain mindful of the current backdrop of
heightened macroeconomic uncertainty. We continue to focus on
offering customers value at all price points, whilst also managing
inflationary pressures effectively. We are confident in our diverse
and resilient business model, and our priority remains consistent
execution against our strategy to drive top line and market share
growth. Furthermore, we remain committed to active and responsive
management of our costs, and are on track with our plans to sell
through a large part of the 'buffer' stock held as of 31 July
2022.
Regarding our profit guidance for this year, we anticipate FY
22/23 adjusted pre-tax profit to be in the range of c.GBP730m to
GBP760m (1) . This includes additional P&L investments to
strengthen our Screwfix France store opening plan, additional wage
support for colleagues, and slightly higher energy costs.
Additional financial guidance for FY 22/23 is provided on page 4 of
this announcement.
Q3 trading highlights
All commentary below is in constant currency.
UK & IRELAND
Total sales +0.1% (LFL - 2.3% ; 3-year LFL + 12.9 % ) , with
trading in Q3 adversely impacted by the abnormally warmer weather
in October. Store closures across the UK in relation to Her
Majesty's funeral impacted UK & Ireland LFL sales in Q3 by
-0.6%.
-- B&Q sales -2.7%. LFL -3.5% (3-year LFL +13.1%), with
sales in line with expectations across all categories. In
particular, building & joinery continues to see strong
momentum, with a positive LFL supported by demand from trade
customers and from high demand of insulation. Showroom sales
performed well in the quarter, with resilient demand in the
bathroom & storage category. Whilst outdoor sales were down YoY
given a strong comparative from the prior year's clearance
activity, sales remain strong versus pre-pandemic levels. Overall,
LFL sales of weather-related categories were -11.5% (+14.6% on a
3-year LFL basis). LFL sales of non-weather-related categories were
-1.9% (+11.6% on a 3-year LFL basis). B&Q's total e-commerce
sales moved into positive YoY growth in Q3, driven by its
marketplace proposition which continues to see strong growth since
its launch in March. Marketplace reached a penetration of 13% in
October (i.e., B&Q's marketplace gross sales divided by
B&Q's total e-commerce sales). TradePoint, B&Q's
trade-focused banner, continued to outperform with LFL sales +1.9%
and 3-year LFL sales +29.5%. TradePoint sales were 23% of B&Q
sales (Q3 21/22: 22%).
-- Screwfix sales +4.9%. LFL -0.5% (3-year LFL +12.4%), with
demand from trade customers supporting a strong YoY performance in
the building & joinery and bathroom & storage categories.
The business saw resilient sales from its tools & hardware and
EPHC (electricals, plumbing, heating & cooling) categories.
Screwfix opened 17 new stores in Q3 in the UK and Republic of
Ireland, with 48 new stores opened in the year to date, and remains
on track to open 80 new stores in these countries during this
financial year. In addition, Screwfix opened its first two stores
in France (in October and November respectively), with a total of
four to five openings planned for this financial year. Note that
the results of Screwfix France are recorded within the 'Other
International' division.
FRANCE
Total sales +0.6 % (LFL +0.5%; 3-year LFL +14.6%). The home
improvement industry in France was adversely impacted by abnormally
warmer weather in October, as well as strikes across petrol
stations in France affecting customer footfall.
-- Castorama sales +0.8%. LFL +0.8% (3-year LFL +16.6%),
reflecting resilient sales from both DIY and DIFM/trade customers.
Most categories saw good 3-year growth, with sales from the
building & joinery and EPHC categories particularly strong YoY,
and with the latter seeing robust growth in heating products and
more energy-efficient solutions. LFL sales of weather-related
categories were +2.9% (+30.8% on a 3-year LFL basis). LFL sales of
non-weather-related categories were flat (+13.2% on a 3-year LFL
basis).
-- Brico Dépôt sales +0.2 %. LFL +0.2% (3-year LFL +12.7%),
reflecting resilient sales and YoY growth from most categories. The
business achieved strong YoY and 3-year growth across EPHC and
building & joinery through an impressive performance in
insulation sales. Brico Dépôt continues to drive increased customer
engagement and improved price perception, as the business focuses
on further strengthening its discounter credentials and
differentiating its ranges.
OTHER INTERNATIONAL
-- Poland sales +10.5%. LFL +7.6% (3-year LFL +21.3%), supported
by strong market share gains. Positive LFL and strong 3-year
performance across all categories, with exceptional growth in the
kitchen category supported by the development of our new ranges and
customer journey. LFL sales of weather-related categories were
+21.7% (+45.3% on a 3-year LFL basis). LFL sales of
non-weather-related categories were +5.2% (+17.7% on a 3-year LFL
basis). A further two new stores opened in Poland in Q3, with five
new stores opened in the year to date.
-- Iberia sales +3.4%. LFL +3.4% (3-year LFL +19.8%), supported
by strong growth in seasonal categories, especially in outdoor and
EPHC given the extended heatwave across August. Good 3-year
performance in the building & joinery, outdoor and EPHC
categories.
-- Romania sales +4.2%. LFL +4.2% (3-year LFL +34.6%),
reflecting robust sales across most categories with notable
strength in kitchens and surfaces & décor.
FY 2022/23 Technical guidance
New guidance, or significant updates to our previous guidance,
are noted below in italics . Please refer to page 6 for further
details regarding forward-looking statements.
Income statement:
-- Space
- Net space growth to impact total sales by c.+1.5% , largely from Screwfix and Poland
-- Gross margin %
- In line with pre-pandemic level (FY 19/20: 37.0%)
-- New businesses
- 'Other' retail losses of c.GBP35m (FY 21/22: GBP10m) (previous
guidance c.GBP30m, with increase driven by additional investment in
Screwfix France) . 'Other' consists of the consolidated results of
Screwfix International, NeedHelp, and franchise agreements,
recorded within the 'Other International' division
- Retail loss of c.GBP5m in relation to investment in B&Q's
e-commerce marketplace, recorded within the results of B&Q in
the 'UK & Ireland' division
-- Central costs
- Broadly flat YoY (FY 21/22: GBP60m)
-- Net finance costs
- Decrease by c.GBP20m mainly as a result of lower interest
expense on lease liabilities (FY 21/22: GBP137m)
-- Adjusted pre-tax profit
- Full year adjusted pre-tax profit in the range of c.GBP730m to
GBP760m(1) (previously c.GBP770m, with trading scenarios for the
balance of H2 providing a potential range of outcomes of c.GBP730m
to GBP770m)
-- Tax rate
- Group adjusted effective tax rate of c.22% (7) (FY 21/22: 22%)
Balance sheet and cash flow:
-- Inventory - anticipate reduction of stock levels in H2 22/23
related to sell-through of a large part of 'buffer' stock
previously held to protect product availability
-- Capital expenditure - targeting gross capex of c.3.5% of
total sales (FY 21/22: GBP397m; c.3.0% of total sales)
-- Tax - in February 2022, a payment of EUR40m (c.GBP34m) was
made to the French tax authorities with regards to a historic tax
liability. The amount was fully provided for in prior periods
-- Share buybacks - c.GBP315m outflow for share buybacks
(c.GBP145m for the first GBP300m programme completed in April, and
a further c.GBP170m related to the second GBP300m programme )
(previous guidance c.GBP325m outflow)
-- Dividends - GBP246m outflow for dividends (GBP172m related to
the FY 21/22 final dividend of 8.60p, and GBP74m related to the FY
22/23 interim dividend of 3.80p). For the total dividend in respect
of FY 22/23, our dividend policy target cover range remains 2.25 to
2.75 times, based on adjusted basic earnings per share
Footnotes
(1) Guidance assumes current exchange rates.
(2) LFL (like-for-like) sales growth represents the constant
currency, year on year sales growth for stores that have been open
for more than one year. Stores temporarily closed or otherwise
impacted due to COVID are also included.
(3) 3-year LFL is calculated by compounding the current and
prior two periods' LFL growth. For example, Q3 22/23 LFL growth of
5%, Q3 21/22 LFL growth of 4%, and Q3 20/21 LFL growth of 3%,
results in 3-year LFL growth of 12.5%. Russia (sale completed on 30
September 2020) is excluded from Group and Other International
3-year LFL calculations.
(4) Brico Dépôt Spain and Portugal.
(5) 'Other' consists of the consolidated results of Screwfix
International, NeedHelp, and revenue from franchise agreements.
(6) 'Q4 22/23 LFL sales (to 19 November 2022 )' represents the
period from 30 October 2022 to 19 November 2022 compared against
the equivalent period in the prior year (i.e., 31 October 2021 to
20 November 2021). The corresponding 3-year LFL represents the
period 30 October 2022 to 19 November 2022 compared against the
equivalent period in FY 19/20 (i.e ., 3 November 2019 to 23
November 2019 ). The figures are provisional and exclude certain
non-cash accounting adjustments relating to revenue
recognition.
(7) Subject to the blend of profit within the Group's various
jurisdictions.
Contacts
Tel: Email:
Investor Relations +44 (0) 20 7644 investorenquiries@kingfisher.com
1082
Media Relations +44 (0) 20 7644 corpcomms@kingfisher.com
1030
Teneo +44 (0) 20 7420 kfteam@teneo.com
3184
Q3 trading update and data tables
This announcement and data tables for Q3 22/23 sales can be
downloaded from www.kingfisher.com/investors .
We can be followed on Twitter (@kingfisherplc) with the Q3
results tag #KingfisherResults.
Full year 22/23 results
Our next scheduled results announcement will be our results for
the year ending 31 January 2023, on 21 March 2023.
American Depository Receipts
Kingfisher American Depository Receipts are traded in the US on
the OTCQX platform: (OTCQX: KGFHY)
http://www.otcmarkets.com/stock/KGFHY/quote .
About Kingfisher plc
Kingfisher plc is an international home improvement company with
approximately 1,530 stores, supported by a team of over 80,000
colleagues. We operate in eight countries across Europe under
retail banners including B&Q, Castorama, Brico Dépôt, Screwfix,
TradePoint and Koçta . We offer home improvement products and
services to consumers and trade professionals who shop in our
stores and via our e-commerce channels. At Kingfisher, our purpose
is to help make better homes accessible for everyone.
Forward-looking statements
You are not to construe the content of this announcement as
investment, legal or tax advice and you should make your own
evaluation of the Company and the market. If you are in any doubt
about the contents of this announcement or the action you should
take, you should consult a person authorised under the Financial
Services and Markets Act 2000 (as amended) (or if you are a person
outside the UK, otherwise duly qualified in your jurisdiction).
This announcement has been prepared in relation to sales for the
quarter ended 31 October 2022. The financial information referenced
in this announcement is not audited and does not contain sufficient
detail to allow a full understanding of the results of the Group.
Nothing in this announcement should be construed as either an offer
or invitation to sell or any offering of securities or any
invitation or inducement to any person to underwrite, subscribe for
or otherwise acquire securities in any company within the Group or
an invitation or inducement to engage in investment activity under
section 21 of the Financial Services and Markets Act 2000 (as
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Certain information contained in this announcement may
constitute "forward-looking statements" (including within the
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on currently available information and our current assumptions,
expectations and projections about future events. These
forward-looking statements include all matters that are not
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or statements regarding the Company's intentions, beliefs or
current expectations and those of our Officers, Directors and
employees concerning, amongst other things, the Company's results
of operations, financial condition, changes in global or regional
trade conditions (including a downturn in the retail or financial
services industries), competitive influences, changes in tax rates,
exchange rates or interest rates, changes to customer preferences,
the state of the housing and home improvement markets, share
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or other proceedings to which we are subject, acts of war or
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events, risks and uncertainties - many of which are beyond our
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unknown to us - as well as
potentially inaccurate assumptions that could cause actual
events or results or actual performance of the Group to differ
materially from those reflected or contemplated in such
forward-looking statements. For further information regarding risks
to Kingfisher's business, please consult the risk management
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achievement or reasonableness of, and no reliance should be placed
on, such forward-looking statements.
The forward-looking statements contained in this announcement
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END
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