TIDMKGF
RNS Number : 1908U
Kingfisher PLC
22 November 2023
Q3 trading update to 31 October 2023
22 November 2023: Kingfisher plc ('Company', 'Group' or
'Kingfisher') is today providing its Q3 23/24 sales.
Key points
-- Q3 sales of GBP3.2bn; total sales -2.1% (reported) and -2.7% (constant currency)
-- LFL -3.9% including a -0.4% calendar impact(1) with overall
volumes continuing to show an improving trend
-- Underlying retail and trade consumer trends resilient in the
UK and improving in Poland, in line with our expectations; market
trends in France weaker than expected
-- Q3 by region:
o UK & Ireland: market share gains at B&Q (including
TradePoint) and Screwfix with resilient underlying sales trends
o France: Castorama performing in line with the market;
underperformance at Brico Dépôt due to significantly higher
weighting of building materials (including insulation) and
electricals, plumbing, heating & cooling (EPHC) products (which
have seen a delayed start due to the warmer weather, against strong
prior year comparatives)
o Poland: improvement in sales trend since H1; market share
remains up significantly on a two-year basis
-- Opened four Screwfix stores in France in Q3 (13 in total);
Screwfix online launched in six new European markets
-- Total e-commerce sales growth of +7.4%, supported by
continued strong growth of B&Q's marketplace (reaching 35% of
B&Q's e-commerce sales(2) in October)
-- Full year adjusted PBT guidance lowered to c.GBP560 m (3) to
reflect continuation of Q3 trends in Q4, including continued
resilience in the UK and market weakness in France; now expect full
year free cash flow of c.GBP470m
-- Launched first tranche of new GBP300m share buyback
programme, with c.GBP26m completed to date
Unaudited Q3 23/24 sales (three months ended 31 October
2023)
Sales % Total % Total % LFL
2023/24 Change Change Change(4)
------------------------- --------- --------- ------------------ ------------------
GBPm Reported Constant currency Constant currency
UK & Ireland 1,597 +3.3% +3.3% +1.1%
- B&Q 946 +1.0% +1.0% +1.1%
- Screwfix 651 + 6.8 % + 6.8 % + 0.9 %
France 1,034 (8.7)% (8.5)% (8.6)%
- Castorama 543 (6.9)% (6.7)% (6.7)%
- Brico Dépôt 491 (10.6)% (10.4)% (10.6)%
Other International 608 (3.7) % (6.8) % (7.6) %
- Poland 438 (2.9) % (7.5) % (9.0) %
- Iberia(5) 90 (4.1)% (3.9)% (3.9)%
- Romania 77 (6.6)% (5.8)% (3.0)%
- Other(6) 3 n/a n/a n/a
Total Group 3,239 (2.1)% (2.7)% (3.9)%
------------------------- --------- --------- ------------------ ------------------
Thierry Garnier, Chief Executive Officer, said:
"Our UK banners performed well in Q3, with B&Q, TradePoint
and Screwfix growing sales and market share. In France, our
performance was impacted by a weak retail market, as well as a
delayed start to insulation, plumbing and heating sales - to which
Brico Dépôt is more heavily weighted - due to unusually warm autumn
weather, and strong prior year comparatives in these categories. In
Poland we are seeing early signs of recovery in the trading trend,
against an incrementally more positive consumer and economic
backdrop. Reflecting the weakness of the French market, and
notwithstanding our proactive cost actions, we have lowered our
Group profit guidance for the full year.
"We continue to focus on our execution and driving our strategy
forward. Our online marketplaces are growing rapidly, with
B&Q's marketplace reaching 35% of its e-commerce sales in
October. Screwfix has continued its international expansion, by
launching as a pure-play online retailer in six new European
countries, and opening four new stores in France in the quarter. We
also continue to harness AI and data to support sales, profit and
cash, including by growing our retail media proposition across the
Group.
"As we move into 2024, we are focused on what is in our control.
First, a continued focus on growing market share in the UK, France
and Poland with delivery of our strategic growth initiatives.
Second, driving productivity gains to offset wage inflation. And
finally, delivering on our free cash flow and shareholder returns
targets. We expect to see some product cost price inflation, albeit
at a significantly lower level, and expect rational retail pricing
and competitive price indices at all our banners.
"On the medium-to-longer term outlook, we remain very positive
for home improvement growth in our markets, and our ability to grow
ahead of our markets."
Current trading and outlook
Q4 has started largely in line with the trends of Q3, including
continued resilience in the UK and market weakness in France (with
Brico Dépôt closing the gap in performance to Castorama). For the
three weeks to 18 November 2023(7) , Group LFL sales were
-3.4%.
We continue to take decisive cost actions in France, more than
offsetting the impact of inflation. However, given continued market
weakness, this is not sufficient to offset the impact of lower
sales in this region. Reflecting our expectation for this trend to
continue in France for the balance of the year, we now expect FY
23/24 Group adjusted pre-tax profit (PBT) to be c.GBP560m (previous
guidance c.GBP590m).
Our revised sales expectation flows through to cash, and so we
now expect to deliver c.GBP 470 m of free cash flow for the year
(previous guidance >GBP500m). This free cash flow is supported
by ongoing sales and profit resilience in the UK as well as the
unwind of working capital flows in the prior year. We continue to
expect a positive contribution from inventory unwind, together with
disciplined capital allocation, which underpin our expectation of
free cash flow delivery. We also reaffirm our commitment to our
recently commenced GBP300m share buyback programme.
Trading in France - Castorama in line with market, Brico Dépôt
mix effect, cost actions being taken
As set out in our H1 23/24 results, Q3 in France started with a
slight slowdown in the sales trend relative to Q2 (August LFL was
-5.3% compared to the Q2 LFL of -3.5%). However, the French home
improvement market deteriorated far more than expected in September
with Banque de France sales data down 9.1%. Although the market and
trading trends have improved in October (and in Q4/November to
date) compared to September, we have assumed that the French market
will remain at least as weak as October throughout Q4.
As a result of the subdued environment in France this year, we
have been proactively managing our operating costs to align as far
as possible to trading conditions. The business has strengthened
actions on flexing staffing levels, lowered discretionary spend and
has accelerated several structural cost reduction initiatives in
H2. These actions will also support improved profitability in
France over the medium-term.
However, at the assumed level of market weakness in Q4, the cost
efficiencies described above and being achieved by the business are
not sufficient to offset the bottom-line impact between now and the
end of the financial year.
% LFL Change
---------------------------------------------------------------------------
Q1 23/24 Q2 23/24 Aug Sep Oct Q3 Q4
2023 2023 2023 23/24 to date (7)
---------- -------
Banque de France
- Contested 0.5% 1.6% (0.5)%
- Corrected (9.1)% ( 5.7)%
----------------- ---------- ---------- ------- ------- -------- -------- ---------------
Kingfisher
France (4.1)% (3.5)% (5.3)% (12.2)% (8.5)% (8.6)% ( 7.5 ) %
- Castorama (3.1)% (2.3)% (4.2)% (9.4)% (6.7)% (6.7)% ( 7.5 ) %
- Brico
Dépôt (5.2)% (4.8)% (6.5)% (15.0)% (10.5)% (10.6)% ( 7.5 ) %
Note - since September 2022, Kingfisher contested the
calculation of Banque de France sales data. Revisions have now been
made to the calculation methodology from and including September
2023. Kingfisher France will retrospectively submit its sales data
to Banque de France from and including September 2023
At Castorama, which is currently performing in line with the
market, we continue to refine our competitive brand positioning. To
support growth ahead of the market in 2024, the business will
launch an e-commerce marketplace and will accelerate the
development of its trade customer proposition. Brico Dépôt has been
relatively more exposed to current French market weakness, due to
its higher category weighting towards building materials (which
includes insulation products) and electricals, plumbing , heating
& cooling (EPHC) products . Sales in these categories have been
delayed due to the warmer weather, while also facing very strong
comparatives. The marketing issues at Brico Dépôt that we described
in our H1 results have been fully resolved. Performance has
improved since September, with Brico Dépôt closing the gap in
performance to Castorama in Q4/November to date. The business
continues to focus on building a differentiated discounter
proposition, and maintaining a strong price index to deliver value
to its customers.
Longer term, our strategy in France remains focused on improving
sales densities and making our operating model more efficient.
Q3 trading highlights
All commentary below is in constant currency.
UK & IRELAND
Total sales +3.3% (LFL + 1.1%) , reflecting resilient consumer
demand. Both banners grew faster than their respective markets (as
measured by the British Retail Consortium, Barclays and GfK), with
particularly strong market share gains seen at Screwfix.
-- B&Q sales +1.0%. LFL +1.1%, with resilient retail trends
outpaced by trade sales. The business saw good performances in
surfaces & décor, tools & hardware and outdoor categories
in the quarter, offsetting a slower start to autumn and winter
product sales. B&Q's total e-commerce sales increased by 31.8%
YoY, with an overall e-commerce sales penetration of 12.9% (Q3
22/23: 10.1%), driven by the further scaling of B&Q's
e-commerce marketplace, which reached a participation of 35% in
October (i.e., B&Q's marketplace gross sales divided by
B&Q's total e-commerce sales). Marketplace gross merchandise
value (GMV)(8) increased by over 290% YoY. B&Q opened one new
store in Q3 (a B&Q Local compact format in Sutton). TradePoint,
B&Q's trade-focused banner, outpaced retail sales in the
quarter with LFL sales of +3.1%, reaching a penetration of 23% of
B&Q's total sales (Q3 22/23: 23%). The banner continues to
successfully strengthen its product and services proposition for
trade customers, including trade-only deals and events. Customer
engagement and loyalty also continues to strengthen, with
membership sign-ups growing YoY.
-- Screwfix sales +6.8%. LFL +0.9%, with robust demand from
trade customers and good YoY growth in the tools & hardware and
building & joinery categories. The unseasonably warm weather in
the UK in September and October impacted sales of plumbing and
heating products. Screwfix opened 11 net new stores in the UK &
Ireland in the quarter, for a total of 23 net new stores opened in
the nine months to 31 October. Note that total sales for Screwfix
UK & Ireland include sales arising from the acquisition on 20
March 2023 of the assets of Connect Distribution Services (renamed
Screwfix Spares). Since acquisition, Screwfix Spares has performed
in line with expectations, contributing c.2% to total Screwfix
sales growth in Q3. The results of Screwfix France are recorded
within the 'Other International' division - see below for further
information.
FRANCE
Total sales -8.5 % (LFL -8.6%), with trading in France impacted
by a weak market backdrop affecting both consumers and trade.
Similar to the UK, unseasonably warm weather in September and early
October led to a slower start of insulation, plumbing and heating
sales, and the businesses faced strong comparatives from Q3 last
year (when consumers anticipated energy price increases and risks
of power shortages, driving strong sales of heating and energy
efficiency products).
-- Castorama sales -6.7%. LFL -6.7%, with performance in line
with the market. Market weakness in France was reflected broadly
across the categories, while electricals, plumbing, heating &
cooling (EPHC) lapped strong sales of heating and energy efficiency
products in the prior year, with performance improving towards the
end of the quarter.
-- Brico Dépôt sales -10.4 %. LFL -10.6%, a weaker performance
relative to Castorama due to the impact of unseasonably warm
weather, with the business exposed to a significantly higher
weighting of building materials (including insulation) and autumn
and winter season products. Sales were also impacted by
exceptionally high sales of insulation, heating propellants and
generators in the prior year. Since the correction to marketing
budget allocation in mid-July, the business has seen an incremental
progression of in-store traffic.
OTHER INTERNATIONAL
-- Poland sales -7.5%. LFL -9.0%, with performance improving
from H1 as consumer confidence, while still negative, continued to
recover. Sales trends improved across most categories, apart from
EPHC where performance was impacted by a comparative period of high
demand in products such as heating propellants, as consumers
anticipated energy price increases. On a two-year basis, Castorama
gained market share in the quarter (to 30 September, as measured by
GfK). Following the one new store opening in H1, Castorama opened
one new medium-box store in Q3 and intends to open three further
stores in Q4, in line with its target of five store openings in
this financial year.
-- Iberia sales -3.9%. LFL -3.9%, with good performance seen in
the building & joinery, kitchen and bathroom & storage
categories. Unfavourable weather impacted sales of seasonal
categories.
-- Romania sales -5.8%. LFL -3.0%, reflecting a resilient
performance against strong prior year comparatives (+4.2%).
Positive YoY growth was achieved in EPHC, bathroom & storage
and outdoor categories.
-- Other consists of the consolidated results of Screwfix
International , NeedHelp and franchise agreements. While these
businesses are in their early investment phase, we continue to be
encouraged by the results we have seen to date. With four new
openings in the quarter, there are now 13 Screwfix stores in
operation in France. Following the early positive results in
France, we launched Screwfix as a pure-play online retailer (under
the domain name Screwfix.eu) in six new European countries (Poland,
Spain, Belgium, the Netherlands, Sweden and Austria), leveraging
Screwfix's distribution centre in France for fulfilment.
Footnotes
(1) Calendar impact represents the impact of the annual calendar
shift on LFL sales growth due to different days of the week falling
into or out of the current period compared to the prior period. For
example, historically, higher trading is seen on a Friday and
Saturday as compared to a Sunday.
(2) B&Q's marketplace gross sales divided by B&Q's total
e-commerce sales. Please refer to the glossary in Kingfisher's
2023/24 Half Year Results announcement for definitions of
e-commerce sales and penetration metrics.
(3) Guidance assumes current exchange rates.
(4) 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.
(5) Brico Dépôt Spain and Portugal.
(6) 'Other' consists of the consolidated results of Screwfix
International, NeedHelp, and revenue from franchise agreements.
(7) 'Q4 23/24 LFL sales (to 18 November 2023 )' represents the
period from 29 October to 18 November 2023 compared against the
equivalent period in the prior year (i.e., 30 October to 19
November 2022). The figures are provisional and exclude certain
non-cash accounting adjustments relating to revenue
recognition.
(8) Marketplace gross sales is the transaction value (excluding
VAT) from the sale of products supplied by third-party e-commerce
marketplace vendors. Returned and cancelled orders are excluded.
Marketplace gross merchandise value (GMV) is the total transaction
value (including VAT, and including returned and cancelled orders)
from the sale of products supplied by third-party e-commerce
marketplace vendors. Marketplace GMV is the basis on which our
commissions from third-party vendors are determined.
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 23/24 sales can be
downloaded from www.kingfisher.com/investors .
We can be followed on Twitter (@kingfisherplc) with the Q3
results tag #KingfisherResults.
Full year 23/24 results
Our next scheduled results announcement will be our results for
the 12 months ending 31 January 2024, on 25 March 2024.
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
over 2,000 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 2023. The financial information referenced
in this announcement is not audited and does not contain sufficient
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END
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