Final results for the year
ended 31 January 2024
|
Financial
summary
|
|
|
% Total
Change
|
% Total
Change
|
% LFL*
Change
|
|
|
2023/24
|
2022/23
|
Reported
|
Constant
currency*
|
Constant
currency
|
|
Sales
|
£12,980m
|
£13,059m
|
(0.6)%
|
(1.8)%
|
(3.1)%
|
|
Gross
profit
|
£4,776m
|
£4,795m
|
(0.4)%
|
(1.6)%
|
|
|
Gross
margin %*
|
36.8%
|
36.7%
|
10bps
|
10bps
|
|
|
Operating
profit
|
£580m
|
£723m
|
(20.0)%
|
|
|
|
Statutory
pre-tax profit (PBT)
|
£475m
|
£611m
|
(22.3)%
|
|
|
|
Statutory
post-tax profit
|
£345m
|
£471m
|
(26.7)%
|
|
|
|
Statutory
basic EPS
|
18.2p
|
23.8p
|
(23.5)%
|
|
|
|
Net
increase/(decrease) in cash±
|
£84m
|
£(555)m
|
n/a
|
|
|
|
Total
dividend(1)
|
12.40p
|
12.40p
|
-
|
|
|
|
|
|
|
|
|
|
|
Adjusted
metrics
|
|
|
|
|
|
|
Retail
profit*
|
£749m
|
£923m
|
(18.9)%
|
(19.5)%
|
|
|
Retail
profit margin %*
|
5.8%
|
7.1%
|
(130)bps
|
(130)bps
|
|
|
Adjusted
pre-tax profit (PBT)*
|
£568m
|
£758m
|
(25.1)%
|
|
|
|
Adjusted
post-tax profit*
|
£415m
|
£589m
|
(29.2)%
|
|
|
|
Adjusted
basic EPS*
|
21.9p
|
29.7p
|
(26.4)%
|
|
|
|
Free cash
flow*
|
£514m
|
£(40)m
|
n/a
|
|
|
|
Net
debt*(2)
|
£(2,116)m
|
£(2,274)m
|
n/a
|
|
|
|
*
See page 6 for further details on
non-GAAP measures and other terms; ± Net increase/(decrease) in cash and cash
equivalents and bank overdrafts
FY 23/24
highlights
· Total
sales -1.8% and LFL -3.1%. Q4 LFL -4.3%
· Positive UK & Ireland sales, alongside consistent market
share gains. France and Poland sales impacted by more challenging
consumer backdrop
· Sequential quarterly improvement in volume trend in 'core'
categories as retail price inflation tapers
· E-commerce sales penetration up to 17.4% (FY 22/23: 16.3%),
supported by strong marketplace sales growth at B&Q
· Adjusted PBT and free cash flow delivered in line with
guidance. Statutory PBT down 22.3% to £475m
· Commenced new £300m share buyback programme (c.£50m completed
to date). Proposed total dividend for FY
23/24 maintained at 12.40p per share, in line with FY
22/23
Key strategic priorities will
drive market share and our medium-term financial
priorities
· Grow by building on our
different banners:
- Screwfix UK & Ireland: up to 40 new stores planned in FY
24/25; medium-term target of >1,000
- Screwfix France: up to 15 new stores planned in FY 24/25;
potential for >600 stores over time
- Castorama Poland: targeting up to 75 medium-box and compact
store openings over next 5 years
- Net
space growth to drive an uplift in sales of c.+1.5% to +2.5% per
annum over medium term
· Accelerate e-commerce through
speed and choice: launching new
e-commerce marketplaces in France and Poland, following strong
results at B&Q. Ambition for e-commerce to reach 30% sales
penetration, one third of which represents high margin marketplace
gross sales
· Build a data-led customer
experience: embedding data and
AI-powered solutions and retail media across the Group to drive
incremental revenue, profit and cash. Ambition for retail media
revenues to reach up to 3% of the Group's total e-commerce
sales
· Develop our trade
business: continued success in the
UK & Ireland; strong results from trade proposition tests in
France and Poland - accelerating roll-out in FY 24/25. Aiming for
>£1bn sales at TradePoint UK & Ireland, and to double trade
penetration in France and Poland over medium term
A clear plan to take France
to the next level
· Initiating a new plan to simplify French organisation and
significantly improve performance and profitability of
Castorama
· Medium-term retail profit margin target for France of
c.5% to
7%
FY 24/25 outlook and
guidance (see Section 1 for further
details)
· Current trading: Q1 24/25 LFL sales (to date)(3)
-2.3%
- Improved sales trend in the UK & Ireland, France and
Poland, compared to Q4 23/24
- Improved volume trend in all three categories: core,
'big-ticket' and seasonal
· Outlook for FY 24/25:
- Expect
repairs, maintenance and renovation on existing homes to provide
resilience, but cautious on overall market outlook given lag
between housing demand & home improvement demand
- Continued effective management of product costs and retail
prices
- Expect
c.£120m of additional cost reductions and productivity gains to
partially offset higher pay rates and technology
investments
- Expect
FY 24/25 adjusted PBT of c.£490m to £550m(4) and free
cash flow of c.£350m to £410m
· Strongly positioned for
growth in 2025 and beyond - more
agile, significant cost taken out across the Group, and confidence
in multiple profitable growth drivers over the medium term.
Targeting free cash flow of c.£450m in FY 25/26, followed by
>£500m per annum from FY 26/27
Thierry
Garnier, Chief Executive Officer, said:
"Despite
all the macroeconomic and consumer challenges in our markets over
the past year, we have stayed focused on our customers and our
long-term strategy. I am immensely proud of all our teams for their
efforts. In the UK & Ireland, B&Q, TradePoint and Screwfix
each delivered resilient sales and market share growth - in
particular very strong gains at Screwfix. In France, where the
market has been impacted by low consumer confidence, we have made
significant adjustments to the cost base and started to embed
e-commerce marketplace and trade customer initiatives similar to
those successfully implemented in the UK. And in Poland, where we
faced strong comparatives and a tough economic backdrop, sales
trends are gradually improving in line with the consumer
environment.
"We
continue to execute against our strategic priorities at pace, with
high conviction in our multiple growth opportunities. The success
of our marketplaces in the UK and Iberia is well ahead of our
expectations, with launches also planned in France and Poland this
year. We have continued the international expansion of Screwfix,
with 22 stores now open in France and encouraging results so far.
Our trade proposition trials in France and Poland, as well as our
data, AI and retail media initiatives, are also delivering positive
results - encouraging us to accelerate their roll-out. We are also
today outlining a new plan to simplify the French organisation and
significantly improve the performance and profitability of
Castorama France, which includes restructuring and modernising the
store network.
"Looking
forward, we remain confident in the attractive growth prospects of
the home improvement industry and our ability to grow ahead of our
markets. In the short term, while repairs, maintenance and
renovation activity on existing homes continue to support resilient
demand, we are cautious on the overall market outlook for 2024 due
to the lag between housing demand and home improvement demand.
Against this backdrop we will remain agile and focused on what is
within our control - leveraging our strategy to deliver market
share growth, driving productivity gains, and managing our costs
and cash effectively.
"In line
with this view, we reaffirm our medium-term financial priorities,
focused on growth, cash generation and attractive returns to
shareholders."
FY 23/24 results
summary
· Sales
-1.8% (in constant currency) and
LFL
sales -3.1%
- Q4 LFL sales -4.3%, broadly in line
with Q3 LFL -3.9%
· Sales by
region:
- UK &
Ireland* LFL +0.8%: Positive
performance, supported by resilient e-commerce and trade customer
sales. Market share gains at B&Q, TradePoint and
Screwfix
- France*
LFL -5.9%: Weak market driven by low consumer
confidence. Castorama performing in line with market; weaker at
Brico Dépôt but improved trend in Q4
- Poland
LFL -9.5%: Performance impacted by weak trading
environment, against very strong comparatives; improving sales
trend since Q2. Gained market share YoY in Q4; full year share
remains up versus FY 21/22
· Sales by
category:
- Core and
'big-ticket' sales*: LFL -2.4%, 82%
of sales. Sequential quarterly improvement in volume trend in
'core' categories (77% of total sales volume)
- Seasonal
sales*: LFL -5.9%, 18% of sales. Sales affected by
unseasonal weather during the year
· Gross margin %
+10 basis points to 36.8% (FY 22/23: 36.7%)
reflecting effective management of inflation and supplier
negotiations, partially offset by higher
customer participation in promotional activity in France and
Poland
· Retail profit
-19.5% in constant currency to £749m (FY 22/23:
£923m), reflecting lower gross profits in France and Poland, and
higher operating costs* in the UK & Ireland and Poland largely
due to higher pay rates and energy costs, as expected
· Statutory PBT
-22.3% to £475m (FY 22/23: £611m), reflecting
lower operating profit, including the impact of £76m of net store
impairments reflecting revised future projections
· Adjusted PBT
-25.1% to £568m (FY 22/23: £758m), reflecting
lower retail profit and higher central costs* and share of JV
interest and tax, partially offset by lower net finance
costs
· Free cash flow
of £514m, up £554m (FY 22/23: £(40)m), reflecting
the unwind of working capital outflows from the prior year, and
lower capital expenditure
· Net increase in
cash of £84m (FY 22/23: net decrease
in cash £555m), reflecting higher free cash flow, partially offset
by £397m returned to shareholders via ordinary dividends and share
buybacks
· Net debt
down to £2,116m (31 January 2023: £2,274m),
including £2,367m of lease liabilities under IFRS 16, reflecting
the net increase in cash. Net debt
to EBITDA* of 1.6x (31 January 2023: 1.6x)
· Total dividend
per share proposed of 12.40p (FY 22/23:
12.40p)
Reaffirming our medium-term
financial and capital allocation priorities
Kingfisher
operates in attractive markets, with positive longer-term
structural trends underpinning the medium to longer-term growth
outlook (including more working from home and the focus on energy
efficiency), giving us confidence in further market growth
potential.
Kingfisher
is a more agile and lean organisation that is strongly positioned
to deliver profitable growth through self-help and operating
leverage.
Building on
our industry's attractive growth prospects, and supported by the
application of Kingfisher's strategic priorities, the
Group's medium-term financial and capital
allocation priorities are as
follows:
Financial
priorities:
· Sales to grow ahead of our
markets:
- LFL
sales growth driven by our strategic focus areas including
e-commerce and marketplace, OEB, trade penetration; and
- Sales
impact of c.+1.5% to +2.5% from annual net space growth over the
medium term, primarily driven by Screwfix and Castorama
Poland
· Adjusted pre-tax profit to
grow faster than sales:
- Supported by scale benefits, higher margin initiatives,
operating cost leverage, and multi-year structural cost reduction
opportunities
· Strong cash generation to
drive growth investment and shareholder returns:
- Free
cash flow of c.£450m in FY 25/26, followed by >£500m per annum from FY 26/27,
supported by profit growth and ongoing inventory self-help
measures
Capital
allocation priorities:
· Organic and 'bolt-on' inorganic growth opportunities that
accelerate our strategy. Target gross capex of c.3% of total sales
per annum, focused on delivering against attractive organic growth
opportunities
· Maintain an efficient capital structure, with a more prudent
position in times of macroeconomic uncertainty; maximum net
leverage (net debt to EBITDA) of 2.0x over the medium
term
· Building on our strong track record of shareholder returns -
over £1.6bn of dividends and share repurchases from FY
19/20:
- A
progressive and sustainable ordinary dividend policy, with target
dividend cover* of 2.25-2.75x
- Any
surplus capital to be returned via share buybacks or special
dividends
Strategy highlights -
delivering against our strategic priorities at
pace
For a
detailed update on the progress we are making against our strategic
plan, 'Powered by Kingfisher', please refer to Section 4 of this
release. The highlights are as follows:
1) Grow by
building on our different banners:
- B&Q's trade-focused banner, TradePoint, opened 21 new
trade counters, extending its presence within the B&Q store
network to 209 (67% of stores)
- Screwfix opened 51 stores in the UK & Ireland for an
overall total of 922 stores; up to 40 new stores planned in FY
24/25
- Screwfix also opened 15 stores in France for an overall total
of 20 stores, with positive customer feedback and momentum. Up to
15 new stores planned in FY 24/25, with two stores opened post
year-end
- Launched Screwfix as a pure-play online retailer in six
European countries (Poland, Spain, Belgium, the Netherlands, Sweden
and Austria)
- Five
new Castorama stores opened in Poland for an overall total of 102
stores. Targeting up to 75 new medium-box and compact store
openings over the next five years
2) Accelerate
e-commerce through speed and choice:
- Total
e-commerce sales* of £2.3bn, an increase of 6.4% YoY supported by
strong marketplace sales growth at B&Q
- E-commerce sales penetration* of 17.4% (FY 22/23: 16.3%).
Ambition to reach 30% sales penetration
- Optimised click & collect (C&C) picking routines
driving a significant decrease in pick times; 93% of first-party
e-commerce orders picked in-store (FY 22/23: 91%)
- Growing adoption of last-mile fulfilment options, including
increased use of Screwfix Sprint (one-hour home delivery),
C&C lockers in Poland, and a new Screwfix partnership with
Deliveroo
- Continued strong growth of e-commerce marketplace proposition
at B&Q and Brico Dépôt Iberia*. B&Q
marketplace gross sales* of £154m for the year, reaching 38%
marketplace participation* in January 2024. Launching similar,
tailored e-commerce marketplaces in France and Poland
- Signed
strategic partnerships with Octopia, Channel Advisor, ShoppingFeed, BeezUp, Linnworks and Just Applications. Provides access to
thousands of additional marketplace merchants globally, supporting
our marketplace roll-outs in France and Poland
3) Build a
data-led customer experience:
- Implemented AI-powered product recommendation
and personalisation engines in the UK, France and
Romania; B&Q now generates c.10% of its e-commerce sales from product
recommendations
- Deployed data and AI-driven tools to optimise promotions,
markdowns and clearance; roll-out at B&Q since Q2 delivering
gross margin improvement. Further banner roll-outs planned in FY
24/25
- Developed and implemented end-to-end supply chain visibility
tool to support lower inventory levels and faster
replenishment cycles, now live in all markets. Sharing
inventory data with suppliers resulting in substantial reductions
in average lead-times and minimum order quantities
- Accelerating retail media (advertising) proposition; now live
at B&Q, Castorama France and Brico Dépôt France. Signed Group partnerships with CitrusAd for technology and
Unlimitail, the new retail
media joint venture between Carrefour and Publicis, for sales support
4) Differentiate
and win through own exclusive brands (OEB):
- OEB
products continuing to drive affordability, product innovation and
reduced environmental impact, and carrying a higher gross margin %
on average than branded products
- Total
OEB sales* of £5.7bn; 45% of Group sales (FY 22/23: 45%)
- OEB
LFL sales -4.6%, impacted by performance of outdoor and
'big-ticket' categories (kitchen, bathroom &
storage)
- Resilient performance from OEB ranges within our tools &
hardware and building & joinery categories
- Developed and commenced roll-out of Green Star product marker, making it
easier for customers to identify and purchase products that have a
reduced impact on the environment
5) Develop our
trade business:
- TradePoint LFL sales +0.7%, following a strong H2 performance
(LFL +3.6%) and outperforming B&Q retail
- Dedicated TradePoint sales partners now recruited in 39
stores, with positive early results showing an uplift in sales to
trade customers. Business-to-business sales up c.25%
- TradePoint sales of £834m represent 22% of B&Q sales (FY
22/23: 22%); medium-term target of >£1bn of TradePoint
sales
- Accelerating development of trade proposition in France,
Poland, Iberia and Romania. Testing and rolling out new trade
loyalty programmes, dedicated trade zones (in 42 stores), the
introduction of new trade-focused services (e.g., finance deals)
and new trade sales partners, and the
continued curation of pro-specific product ranges. Very encouraging
results to date on sales and trade customer penetration. Aiming to
double trade penetration in France and Poland over medium
term
6) Roll out
compact store formats:
- Opened
9 new compact stores in the UK, France and Poland for a total of 27
active tests
- High
street compact store tests (e.g., 'B&Q Local' in the UK and
'Casto' in France) continue to deliver encouraging learnings and
results. Testing in locations outside of major cities in FY
24/25
- Small
retail park concepts in Poland ('Castorama Smart') being adapted
and iterated to find optimum blueprint
- Brico
Dépôt France opened its first two compact stores; an innovative
1,000 sqm format
7) Lead the
industry in Responsible Business and energy
efficiency:
- Continuing to prioritise pay awards to help colleagues manage
higher costs of living
- New
target established for more than 20,000 colleagues to complete an
apprenticeship, traineeship or external qualification by
2030
- Reduced carbon footprint for own operations (scope 1 and 2
emissions) by 62.0% against a FY 16/17 base
year, remaining ahead of our 1.5°C aligned
science-based target
- Reduced intensity of scope 3 emissions from the supply chain
and customer use of products by 41.6% against a FY 17/18 base year,
exceeding our 2025 target
- Leveraging OEB capabilities to build products that reduce
impact on the environment. Kingfisher's Sustainable Home Products
(SHP) sales were £6.4bn, representing 49% of Group sales (FY 22/23:
47%)
- 10% of Group sales from energy and
water-saving products (FY 22/23:
10%)
8) Human, agile
and lean:
- Employee Net Promoter Score (eNPS) of 57, up three points YoY,
setting Kingfisher within the top 5% of worldwide
retailers
- Progress made in transitioning to a more agile and modular
technology operating model; moving from physical data centres to
the cloud through a new strategic partnership with Google
- Continuing to deliver on multi-year structural cost reduction
programmes to partially offset costs of
inflation, expansion and space changes, and our investment
requirements over the medium term
- Decrease in net inventory of 4% YoY (in constant currency)
driven by lower purchasing, a reduction in seasonal and 'buffer'
stock, product mix and strategic reduction
initiatives; partially offset by cost inflation and new stores.
Inventory in units (volume) down 4% YoY and product availability up
2% YoY
- Actions underway to further optimise supply chain and
inventory management
The remainder of this release
consists of eight main sections:
1) Financial performance summary and current
trading & outlook
2) Trading review by division
3) France performance and profitability
plan
4) Strategy update
5) Technical guidance for FY
24/25
6) Financial review (and, in part 2 of this
announcement, the condensed financial statements)
7) Glossary
8) Forward-looking statements
Footnotes
(1) The Board has proposed a
final dividend per share of 8.60p (FY 22/23 final dividend: 8.60p),
resulting in a proposed total dividend per share of 12.40p in
respect of FY 23/24 (FY 22/23: 12.40p). The final dividend is
subject to the approval of shareholders at the Annual General
Meeting on 20 June 2024.
(2) Net debt includes £2,367m of
lease liabilities under IFRS 16 in FY 23/24 (FY 22/23:
£2,444m).
(3) 'Q1 24/25 LFL sales (to
date)' represents the period from 4 February 2024 to 23 March 2024
compared against the equivalent period in the prior year (i.e., 5
February 2023 to 25 March 2023). The figures are provisional and
exclude certain non-cash accounting adjustments relating to revenue
recognition.
(4) Guidance assumes current
exchange rates.
Non-GAAP measures and other
terms
Throughout
this release '*' indicates the first instance of a term defined and
explained in the Glossary (Section 7). Not all the figures and
ratios used are readily available from the unaudited final results
included in part 2 of this announcement. Management believes that
these non-GAAP measures (or 'Alternative Performance Measures'),
including adjusted profit measures, constant currency and
like-for-like (LFL) sales growth, are useful and necessary to
assist the understanding of the Group's results. Where required, a
reconciliation to statutory amounts is set out in the Financial
Review (Section 6).
Contacts
Final results announcement
and data tables
This
announcement and data tables for FY 23/24 can be downloaded from
the Investors section of our website at www.kingfisher.com/investors.
Results
presentation
We will
host an in-person results presentation for pre-registered analysts
and investors today at 09.00 (UK time) at the London Stock
Exchange, 10 Paternoster Square, London, EC4M 7LS. A simultaneous
live video webcast of the presentation and Q&A will also be
available via the Investors section of our website at
www.kingfisher.com,
and subsequently available on demand.
For
enquiries, please email investorenquiries@kingfisher.com.
Financial
calendar
|
Q1 24/25
trading update
|
21 May
2024
|
|
Annual
General Meeting
|
20 June
2024±
|
|
Half year
results
|
17
September 2024±
|
|
Q3 24/25
trading update
|
25 November
2024±
|
±
Dates are
provisional and may be subject to change
American Depository
Receipts
Kingfisher
American Depository Receipts are traded in the US on the OTCQX
platform: (OTCQX: KGFHY) www.otcmarkets.com/stock/KGFHY/quote.
Section 1: Financial
performance summary and current trading &
outlook
Income statement
summary
|
£m
|
|
|
|
% Total
Change
|
% Total
Change
|
% LFL
Change
|
|
|
|
2023/24
|
2022/23
|
Reported
|
Constant
currency
|
Constant
currency
|
|
Sales
|
|
12,980
|
13,059
|
(0.6)%
|
(1.8)%
|
(3.1)%
|
|
Gross
profit
|
|
4,776
|
4,795
|
(0.4)%
|
(1.6)%
|
|
|
Retail
profit:
|
|
|
|
|
|
|
|
UK &
Ireland
|
|
555
|
603
|
(8.0)%
|
(8.0)%
|
|
|
France
|
|
139
|
195
|
(28.8)%
|
(29.7)%
|
|
|
Poland
|
|
82
|
148
|
(44.5)%
|
(47.4)%
|
|
|
Iberia
|
|
6
|
9
|
(34.6)%
|
(35.5)%
|
|
|
Romania
|
|
(18)
|
(10)
|
n/a
|
n/a
|
|
|
Other±
|
|
(30)
|
(30)
|
n/a
|
n/a
|
|
|
Turkey (50% joint venture)
|
|
15
|
8
|
n/a
|
n/a
|
|
|
Other
International*
|
|
55
|
125
|
(56.0)%
|
(57.5)%
|
|
|
Retail
profit
|
|
749
|
923
|
(18.9)%
|
(19.5)%
|
|
|
Central
costs
|
|
(60)
|
(49)
|
(22.9)%
|
|
|
|
Share of JV
interest and tax
|
|
(16)
|
(4)
|
n/a
|
|
|
|
Operating profit
(before adjusting items*)
|
|
673
|
870
|
(22.6)%
|
|
|
|
Net finance
costs
|
|
(105)
|
(112)
|
+6.1%
|
|
|
|
Adjusted
PBT
|
|
568
|
758
|
(25.1)%
|
|
|
|
Adjusting
items
|
|
(93)
|
(147)
|
n/a
|
|
|
|
Statutory
PBT
|
|
475
|
611
|
(22.3)%
|
|
|
± 'Other' consists of the
consolidated results of Screwfix International, NeedHelp, and
results from franchise and wholesale agreements.
Quarterly LFL
sales
|
|
% LFL
Change
|
|
Q1 23/24
|
Q2 23/24
|
Q3 23/24
|
Q4 23/24
|
FY 23/24
|
|
|
UK &
Ireland
|
(0.8)%
|
+4.1%
|
+1.1%
|
(1.6)%
|
+0.8%
|
|
|
-
B&Q
|
(1.6)%
|
+3.3%
|
+1.1%
|
(1.8)%
|
+0.4%
|
|
|
-
Screwfix
|
+0.7%
|
+5.6%
|
+0.9%
|
(1.4)%
|
+1.4%
|
|
|
France
|
(4.1)%
|
(3.5)%
|
(8.6)%
|
(8.0)%
|
(5.9)%
|
|
|
-
Castorama
|
(3.1)%
|
(2.3)%
|
(6.7)%
|
(8.0)%
|
(4.8)%
|
|
|
- Brico
Dépôt
|
(5.2)%
|
(4.8)%
|
(10.6)%
|
(7.9)%
|
(7.1)%
|
|
|
Other
International
|
(8.1)%
|
(9.3)%
|
(7.6)%
|
(4.9)%
|
(7.7)%
|
|
|
-
Poland
|
(10.3)%
|
(11.5)%
|
(9.0)%
|
(6.6)%
|
(9.5)%
|
|
|
-
Iberia
|
+2.5%
|
(4.2)%
|
(3.9)%
|
(0.8)%
|
(1.8)%
|
|
|
-
Romania
|
(7.8)%
|
(2.7)%
|
(3.0)%
|
+0.4%
|
(3.3)%
|
|
|
Group LFL
|
(3.3)%
|
(1.2)%
|
(3.9)%
|
(4.3)%
|
(3.1)%
|
|
|
Total e-commerce
sales(1)
|
+4.6%
|
+9.5%
|
+7.4%
|
+4.0%
|
+6.4%
|
|
|
H1/H2 LFL sales by core and
'big-ticket' vs seasonal
|
|
% LFL
Change
|
|
|
Core and
'big-ticket'
|
Seasonal
|
H1 23/24
|
Core and
'big-ticket'
|
Seasonal
|
H2 23/24
|
|
UK &
Ireland
|
+2.8%
|
(2.1)%
|
+1.7%
|
(0.5)%
|
+1.7%
|
(0.2)%
|
|
-
B&Q
|
+2.7%
|
(3.2)%
|
+1.0%
|
(0.4)%
|
+0.7%
|
(0.2)%
|
|
-
Screwfix
|
+3.0%
|
+4.4%
|
+3.1%
|
(0.6)%
|
+5.5%
|
(0.2)%
|
|
France
|
(2.1)%
|
(8.5)%
|
(3.8)%
|
(7.9)%
|
(10.3)%
|
(8.3)%
|
|
-
Castorama
|
(0.9)%
|
(7.0)%
|
(2.7)%
|
(7.3)%
|
(7.6)%
|
(7.3)%
|
|
- Brico
Dépôt
|
(3.4)%
|
(10.8)%
|
(5.0)%
|
(8.5)%
|
(14.1)%
|
(9.3)%
|
|
Other
International
|
(8.6)%
|
(9.3)%
|
(8.8)%
|
(5.6)%
|
(11.4)%
|
(6.4)%
|
|
-
Poland
|
(10.8)%
|
(11.3)%
|
(10.9)%
|
(6.6)%
|
(15.9)%
|
(7.9)%
|
|
-
Iberia
|
+0.2%
|
(6.4)%
|
(1.2)%
|
(1.1)%
|
(10.6)%
|
(2.4)%
|
|
-
Romania
|
(6.1)%
|
(1.3)%
|
(4.9)%
|
(4.7)%
|
+14.5%
|
(1.6)%
|
|
Group LFL
|
(1.0)%
|
(5.9)%
|
(2.2)%
|
(3.8)%
|
(5.9)%
|
(4.1)%
|
|
Proportion of
sales
|
78%
|
22%
|
|
86%
|
14%
|
|
|
|
|
|
|
|
|
| |
|
Trading in Q4
23/24
LFL sales
were down by 4.3% in Q4, broadly in line with Q3 (LFL -3.9%). We
saw more resilience in our tools & hardware, surfaces &
décor and building & joinery product sales relative to the
performance of other categories. The standout performance was in
the seasonal ranges of our EPHC (electricals, plumbing, heating
& cooling) category, showing a significant sequential
improvement in the sales trend from Q3. E-commerce sales were up by
4.0% in Q4, driven by the strong growth of our e-commerce
marketplaces in B&Q and Brico Dépôt Iberia, together with good
online sales growth at both banners in France.
Our overall
performance in Q4 was significantly affected by weak market growth
in December in the UK & Ireland and France. In the
UK &
Ireland, trading in November was in
line with the Q3 trend, followed by a weaker December, resulting in
slower building & joinery, EPHC and 'big-ticket' category
sales. We then saw a recovery in January to the same trend as
November. Core and 'seasonal' category sales were positive in
January, offset by weaker 'big-ticket' sales. B&Q, TradePoint
and Screwfix all grew faster than their respective markets in Q4,
as measured by the British Retail
Consortium (BRC), Barclays and GfK.
In
France, trading in November was
slightly improved over the Q3 sales trend, before deteriorating in
December and recovering again in January. Against the backdrop of
weak consumer sentiment in France throughout the quarter, as
expected, both Castorama and Brico Dépôt performed broadly in line
with the market. Brico Dépôt delivered a sequential sales trend
improvement in Q4 across its core, 'big-ticket' and seasonal
categories, exiting the year in January with its best monthly LFL
sales performance since August 2023.
In
Poland, Castorama improved on
its sales trend of Q3 and delivered YoY market share gains in the
quarter (as measured by GfK) for the first time in FY
23/24. Iberia and Romania
also saw a sequential improvement in their Q4
sales trends, driven by core and seasonal categories.
Current
trading
Q1 24/25
LFL sales (to date)(2) are down by 2.3%.
Trading in the UK & Ireland is ahead of the
sales trend in Q4 23/24, with positive core and seasonal category
sales YoY offset by weakness in 'big-ticket'
sales. In France, trading is consistent
across all three categories, with the overall sales trend ahead of
Q4. In Poland, we have seen an improvement in the sales trend
relative to Q4, with positive 'big-ticket'
and seasonal category sales YoY.
Core,
'big-ticket' and seasonal volumes for the Group are all showing an
improvement versus the YoY volume trends in Q4.
Outlook for FY
24/25
To support
our planning for FY 24/25, we have assessed various scenarios for
the growth of our total
addressable home improvement markets in the UK &
Ireland, France and Poland in 2024, versus 2023. The "high case"
and "low case" scenarios are noted below, in constant currency and
including expected market space growth:
|
|
Our expectation of total
addressable
home improvement market % change in 2024 (YoY)
|
|
|
Low case
|
High case
|
|
UK & Ireland
|
Low-single digit decline
|
Flat
|
|
France
|
Mid-single digit decline
|
Low-single digit decline
|
|
Poland
|
Flat
|
Low-single digit growth
|
In the
UK & Ireland, we
observe a relatively resilient consumer, and continue to expect
repairs, maintenance and existing home renovation to be supportive.
However, we are mindful of the continued uncertainties facing
households (including from employment and mortgage rates), and also
a nine to 12-month lag, on average, between housing demand and the
realisation of home improvement spend. As a result, our outlook for
the UK & Ireland home improvement market in 2024 is low-single
digit % decline to flat YoY.
In
France, we continue to see
subdued consumer confidence and a weak housing market, supporting
our home improvement market outlook of a mid-single digit % to
low-single digit % decline YoY.
In
Poland, inflation and
interest rates have come down versus their peaks in 2023, and
consumer confidence is gradually improving, with potential for
further improvement as households benefit from real wage growth
this year. Our outlook for the home improvement market in Poland is
therefore flat to low-single digit % growth YoY.
Against
this backdrop, we will continue to focus on growing ahead of our
markets by leveraging our key strategic priorities. Furthermore, we
remain committed to the effective management of product costs and
retail prices, as we have demonstrated in recent years. We are
targeting c.£120m of additional cost reductions and productivity
gains this year, to partially offset higher pay rates and
technology investments.
As a result
of the above, we expect FY 24/25 adjusted PBT of c.£490m to £550m,
and free cash flow of c.£350m to £410m.
Footnotes
(1) Total e-commerce sales are
first-party e-commerce sales plus marketplace gross sales.
References to digital or e-commerce sales growth relates to growth
in constant currency and covers the total Group.
(2) 'Q1 24/25 LFL sales (to
date)' represents the period from 4 February 2024 to 23 March 2024
compared against the equivalent period in the prior year (i.e., 5
February 2023 to 25 March 2023). The figures are provisional and
exclude certain non-cash accounting adjustments relating to revenue
recognition.
Section 2: Trading review by
division
Note: all commentary below
is in constant currency.
UK &
IRELAND
|
£m
|
2023/24
|
2022/23
|
% Reported
Change
|
% Constant
Currency
Change
|
% LFL
Change
|
|
B&Q
|
3,849
|
3,835
|
+0.4%
|
+0.3%
|
+0.4%
|
|
Screwfix
|
2,538
|
2,365
|
+7.3%
|
+7.3%
|
+1.4%
|
|
Total sales
|
6,387
|
6,200
|
+3.0%
|
+3.0%
|
+0.8%
|
|
|
|
|
|
|
|
|
Retail
profit
|
555
|
603
|
(8.0)%
|
(8.0)%
|
|
|
Retail profit margin
%
|
8.7%
|
9.7%
|
(100)bps
|
(100)bps
|
|
UK &
Ireland sales increased by 3.0% (LFL +0.8%) to £6,387m, supported
by resilient e-commerce and trade customer sales. Core categories
performed well, supported by an improving underlying volume trend
through the year, while retail sales in 'big-ticket' categories
(i.e., kitchen and bathroom & storage) weakened in H2. Seasonal
categories were impacted by adverse weather patterns during the
year, particularly in Q1 and Q4, but notably improved in H2
relative to the first half of the year. B&Q, TradePoint and
Screwfix all gained market share (as measured by BRC, Barclays and GfK), strengthening their competitive
positions in the UK home improvement market. Gross margin %
increased by 40 basis points, reflecting effective management of
inflation and favourable channel mix impacts due to the strong
growth of B&Q's e-commerce marketplace.
Retail
profit decreased by 8.0% to £555m (FY 22/23: £603m, at reported
rates), due to higher operating costs. Operating costs increased by
8.0%, driven by cost inflation, including YoY increases in staff
and energy costs, higher costs associated with 45 net new store
openings (YoY), and higher technology spend. Cost increases were
partially offset through structural savings achieved by our cost
reduction programme. Retail profit margin % decreased by 100 basis
points to 8.7% (FY 22/23: 9.7%).
B&Q
total sales increased by 0.3% (LFL +0.4%) to
£3,849m, with LFL sales growth in surfaces & décor and tools
& hardware categories and resilient sales in building &
joinery and outdoor. Sales trends slowed in H2 (LFL -0.2%),
particularly in Q4, with a weaker performance seen in 'big-ticket'
categories and warmer weather impacting the sales of EPHC
(electricals, plumbing, heating & cooling). B&Q's total
e-commerce sales increased by 21.5% YoY, driven by the strong
growth of B&Q's marketplace. B&Q's e-commerce sales
penetration was 13% (FY 22/23: 11%; FY 19/20: 5%). The business
opened one medium-box (small retail park) and two compact
'B&Q Local' stores in
the year, and closed all eight of its grocery concession stores. As
of 31 January 2024, B&Q had a total of 311 stores in the UK
& Ireland.
B&Q's
trade-focused banner, TradePoint, delivered a good
performance supported by resilient demand from trade customers. LFL
sales for TradePoint were up 0.7%, despite tough comparatives, with
penetration of B&Q sales at 22% (FY 22/23: 22%). A strong
performance was seen in the surfaces & décor and tools &
hardware categories. In H2, TradePoint's LFL sales improved to
+3.6%. Sales to trade customers of 'big-ticket' categories also
improved in the second half of the year, with resilient sales of
bathroom & storage. TradePoint opened
21 new counters in the UK & Ireland, extending its presence
within the B&Q store network to 209 stores (67% of
stores).
Screwfix
total sales increased by 7.3% (LFL +1.4%) to
£2,538m, driven by resilient demand from trade customers. Good
performance was seen across most categories, with tools &
hardware, building & joinery and outdoor performing
particularly well. Sales trends slowed in H2 (LFL -0.2%) largely
due to a weak market in December and unseasonably warmer weather
throughout the period. The business gained significant market share
in the year. Screwfix's e-commerce sales increased by 1.6% YoY,
with e-commerce sales penetration of 57% (FY 22/23: 60%; FY 19/20:
33%), reducing slightly YoY due to the increasing adoption of
in-store digital browsing tablets.
Space growth and acquisitions
contributed c.6% to total Screwfix sales. Screwfix opened 51 new
stores, including 46 in the UK and five in Ireland, and closed one
store in the UK, bringing its total to 922 as of 31 January 2024.
Screwfix plans to open up to 40
new stores in the UK & Ireland in FY 24/25,
remaining on track to reach its medium-term goal of over 1,000
stores.
In March
2023, the business acquired the stock, intellectual property,
contracts and fixed assets of Connect Distribution Services Limited
(renamed Screwfix Spares), a leading retailer of appliance spares,
accessories and consumables to tradespeople and consumers. Since
acquisition, Screwfix Spares has performed in line with
expectations, contributing c.1.8% to total Screwfix sales growth.
Monthly sales accelerated in H2, with the business reaching a
profit-making position by the end of the year.
Further
progressing its international expansion plans, Screwfix opened 15
stores in France in the year (with 20 stores in total as of 31
January 2024), and plans to open up to 15 stores in FY 24/25. The
results for Screwfix
International are captured in 'Other International' - see below for
further information.
FRANCE
|
£m
|
2023/24
|
2022/23
|
% Reported
Change
|
% Constant
Currency
Change
|
% LFL
Change
|
|
Castorama
|
2,219
|
2,302
|
(3.6)%
|
(4.8)%
|
(4.8)%
|
|
Brico Dépôt
|
2,027
|
2,150
|
(5.7)%
|
(6.9)%
|
(7.1)%
|
|
Total sales
|
4,246
|
4,452
|
(4.6)%
|
(5.8)%
|
(5.9)%
|
|
|
|
|
|
|
|
|
Retail
profit
|
139
|
195
|
(28.8)%
|
(29.7)%
|
|
|
Retail profit margin
%
|
3.3%
|
4.4%
|
(110)bps
|
(110)bps
|
|
France
sales decreased by 5.8% (LFL -5.9%) to £4,246m, with the trading environment
impacted by low consumer confidence, particularly in the second
half of the year. In H2, LFL sales were -8.3%, with market weakness
reflected broadly across all categories. Unseasonal weather
conditions also impacted the performance of seasonal categories
during the year (LFL -9.2%). Gross margin % decreased by 10 basis
points, reflecting the higher weighting of
sales towards special promotions ('arrivages') at Brico Dépôt, largely
offset by effective supplier negotiations and lower distribution
costs and shrinkage rates. Gross margin % increased by 20 basis
points in H2.
Retail
profit decreased by 29.7% to £139m (FY 22/23: £195m, at reported
rates), with lower gross profit somewhat offset by lower operating
costs. Operating costs decreased by 2.9% due to the active flexing
of variable costs, and structural savings achieved by our cost
reduction programme. This was partially offset by cost inflation,
including YoY increases in pay rates and energy costs, together
with higher technology spend. In H2, in response to the weaker
trading environment, the business accelerated several structural
cost reduction initiatives and strengthened its actions around
staff costs and discretionary spend, resulting in an operating cost
reduction of 4.4% YoY. Retail profit margin % decreased by 110
basis points to 3.3% (FY 22/23: 4.4%, at reported
rates).
Castorama
total sales decreased by 4.8% (LFL -4.8%) to
£2,219m, broadly in line with the market
against a challenging consumer backdrop.
Sales trends slowed in H2 (LFL -7.3%), reflecting the weaker
trading environment in that time period. Market weakness was
reflected broadly across the categories, with EPHC also lapping
strong sales of heating and energy efficiency products in the prior
year. Volume trends YoY in core and
'big-ticket' categories improved in Q4, compared to Q3.
Castorama's e-commerce sales increased by 4.9%
YoY, with e-commerce sales penetration of 6% (FY 22/23: 5%; FY
19/20: 2%). As of 31 January 2024, Castorama had a total of 95
stores in France.
Brico Dépôt
total sales decreased by 6.9% (LFL
-7.1%) to £2,027m,
a weaker performance relative to Castorama. Performance in H1 was
impacted by a reallocation of a portion of its marketing budget to
digital, which proved unsuccessful and was
corrected in mid-July. Sales trends slowed in Q3 (LFL -10.6%) as
the trading environment weakened, with Brico Dépôt more exposed
than Castorama due to a relatively higher category weighting
towards building materials and EPHC, with plumbing, heating and
insulation products also impacted by milder weather and strong
comparatives. Sales trends improved in Q4, notably in EPHC and
bathroom & storage, with Brico Dépôt's sales broadly in line
with the market (LFL -7.9%). For the year, e-commerce sales
increased by 14.7%, the fastest first-party (1P) e-commerce sales*
growth rate of all banners in the Group. E-commerce penetration
reached 5% (FY 22/23: 4%; FY 19/20: 2%). Brico Dépôt opened two
stores during the year, with a total of 125 stores in France as of
31 January 2024.
OTHER
INTERNATIONAL
|
|
2023/24
|
2022/23
|
% Reported
Change
|
% Constant
Currency
Change
|
% LFL
Change
|
|
Sales (£m)
|
|
|
|
|
|
|
Poland
|
1,694
|
1,734
|
(2.3)%
|
(7.4)%
|
(9.5)%
|
|
Iberia
|
371
|
373
|
(0.5)%
|
(1.8)%
|
(1.8)%
|
|
Romania
|
269
|
285
|
(5.6)%
|
(6.4)%
|
(3.3)%
|
|
Other±
|
13
|
15
|
n/a
|
n/a
|
n/a
|
|
Other
International
|
2,347
|
2,407
|
(2.5)%
|
(6.5)%
|
(7.7)%
|
|
|
|
|
|
|
|
|
|
Retail profit
(£m)
|
|
|
|
|
|
|
Poland
|
82
|
148
|
(44.5)%
|
(47.4)%
|
|
|
Iberia
|
6
|
9
|
(34.6)%
|
(35.5)%
|
|
|
Romania
|
(18)
|
(10)
|
n/a
|
n/a
|
|
|
Other±
|
(30)
|
(30)
|
n/a
|
n/a
|
|
|
Turkey (50%
JV)
|
15
|
8
|
n/a
|
n/a
|
|
|
Other
International
|
55
|
125
|
(56.0)%
|
(57.5)%
|
|
|
|
|
|
|
|
|
|
Retail profit margin
%
|
|
|
|
|
|
|
Poland
|
4.8%
|
8.5%
|
(370)bps
|
(370)bps
|
|
|
Other
International
|
2.3%
|
5.2%
|
(290)bps
|
(280)bps
|
|
± 'Other' consists of the
consolidated results of Screwfix International, NeedHelp, and
results from franchise and wholesale agreements.
Other
International total sales decreased
by 6.5% (LFL -7.7%) to £2,347m, reflecting tough prior year
comparatives across all geographies (FY 22/23 LFL +11.2%). Retail
profit decreased by 57.5% to £55m (FY 22/23: £125m, at reported
rates), largely reflecting the retail profit decline in Poland in
H1 (£59m). Retail profit margin % decreased by 280 basis points to
2.3% (FY 22/23: 5.2%, at reported rates).
Poland
total sales decreased by 7.4% (LFL -9.5%) to
£1,694m, against strong prior year comparatives (FY 22/23 LFL
+13.8%) and a challenging trading environment. Market weakness was
reflected broadly across the categories, with EPHC lapping very
strong prior year comparatives. Sales trends improved in H2 (LFL
-7.9%, versus H1 LFL -10.9%), supported by core category sales, and
in line with a gradual improvement in the consumer environment. The
business exited the year with Q4 LFL of -6.6%, compared to the
'trough' second quarter of -11.5%, and sales trends have continued
to improve into the new financial year. Castorama's market share
remained above FY 21/22 levels for the full year and, on a YoY
basis, gained share in Q4 (as measured by GfK). Castorama's e-commerce sales
decreased by 32.6% YoY, following some temporary disruption arising
from the implementation of its new digital technology stack in H1.
E-commerce sales penetration was 3% (FY 22/23: 5%; FY 19/20:
2%).
Space
growth contributed c.2% to total Poland sales. Castorama opened
five stores in FY 23/24 (three big-box, one medium-box and one
compact 'Castorama Smart' store), bringing its total to 102 stores
in Poland as of 31 January 2024.
Gross
margin % decreased by 20 basis points, reflecting higher customer
participation in promotional activity and sales mix. This was
largely offset by effective management of inflation and supplier
negotiations, and a lower stock provision movement compared to the
prior year. Gross margin % increased by 150 basis points YoY in H2.
Retail profit decreased by 47.4% to £82m (FY 22/23: £148m, at
reported rates) due to a lower gross profit and an increase in
operating costs. Despite adjusting variable costs to the
challenging environment and realising further savings from our
structural cost reduction programme, operating costs increased by
5.6%. This was driven by high cost inflation (including YoY
increases in pay rates and energy costs), higher technology spend,
higher costs associated with five new store openings (YoY), and
charges related to ineffective foreign exchange hedges. In H2, the
business strengthened its cost initiatives by further flexing
staffing levels, lowering discretionary spend, and rephasing
certain investments (including fewer store openings), resulting in
operating costs being limited to an increase of 1.7% YoY. Retail
profit margin % decreased by 370 basis points to 4.8% (FY 22/23:
8.5%, at reported rates), with the H2 retail profit margin %
improving sequentially to 5.8%, 80 basis points lower YoY (H2
22/23: 6.6%, at reported rates).
Iberia
total sales decreased by 1.8% (LFL -1.8%) to
£371m. Core and 'big-ticket' category sales were resilient (LFL
-0.4%), while seasonal categories (LFL -8.0%) were impacted by
unseasonal weather from Q1 onwards. The development of Iberia's
trade proposition supported good YoY growth in its building &
joinery and kitchen categories. Retail profit decreased to £6m (FY
22/23: £9m, at reported rates), reflecting lower sales and gross
margin %, partially offset by lower operating costs, down 0.8%
YoY.
Romania
total sales decreased by 6.4% to £269m (LFL
-3.3%), against strong prior year comparatives (FY 22/23 LFL +7.8%) and a challenging trading environment.
Sales trends improved in H2 (LFL -1.6% vs H1 -4.9%), driven by an
improvement in core and seasonal category sales, with LFL sales in
Q4 slightly positive (+0.4%). Sales in the EPHC category were
particularly strong, with a resilient performance in outdoor and
bathroom & storage. Romania's retail loss increased to £18m (FY
22/23: £10m reported retail loss), reflecting lower sales and gross
margin %. Operating costs decreased by 3.1%, with cost inflation
more than offset by our structural cost reduction initiatives
including reduced energy usage in stores.
In
Turkey, Kingfisher's 50% joint
venture, Koçtaş, contributed £15m of retail profit (FY 22/23: £8m,
at reported rates). The increase in retail profit largely reflects
accounting under high inflation, and was more than offset by
related higher interest rates recorded in our share of Koçtaş'
interest and tax. The overall contribution of Koçtaş was therefore
a net loss of £1m (FY 22/23: £4m net profit contribution). Net of
store closures, the business added 13 new stores (one big-box and
12 compact) in their financial year to 31 December 2023, bringing
its total store count to 368.
'Other'
consists of the consolidated results of
Screwfix International,
NeedHelp, and franchise and wholesale agreements. Due
to these businesses being in their early investment phase, a
combined retail loss of £30m (FY 22/23: £30m reported retail loss)
was recorded, largely driven by Screwfix France as the business
invested in the opening of new stores. Screwfix has a total of 20 stores in
operation in France as of 31 January 2024, having opened 15 in FY
23/24. Sales from these stores continue to show an encouraging
trend, supported by an expanded product range of c.14k SKUs*, and
the launch of third-party trade credit and Sprint one-hour home delivery. The
business also launched as a pure-play online retailer in six
additional European countries in Q3. As reported in our half-year
results in September, our two B&Q franchise stores in Saudi Arabia
have now closed, and we
are re-focusing efforts on wholesale and franchise agreements in
other markets. We currently have wholesale agreements in place in three
countries in Europe and the Middle East, whereby certain OEB
products are supplied to its retailers.
RETAIL BANNER EMPLOYEES,
STORE NUMBERS AND SALES AREA
|
|
Employees
(FTE)
at 31 Jan
2024
|
Store
numbers
at 31 Jan 2024
|
Sales
area(1)
(000s
m2)
at 31 Jan
2024
|
|
B&Q
|
15,187
|
311
|
2,210
|
|
Screwfix
|
9,919
|
922
|
56
|
|
UK &
Ireland
|
25,106
|
1,233
|
2,266
|
|
Castorama
|
9,878
|
95
|
1,153
|
|
Brico
Dépôt
|
7,820
|
125
|
877
|
|
France
|
17,698
|
220
|
2,030
|
|
Poland
|
11,740
|
102
|
851
|
|
Iberia
|
1,804
|
31
|
195
|
|
Romania
|
2,178
|
32
|
230
|
|
Other(2)
|
255
|
20
|
1
|
|
Other
International
|
15,977
|
185
|
1,277
|
|
Total
|
58,781
|
1,638
|
5,573
|
(1) Screwfix sales area relates
to the front of counter area of an outlet.
(2) 'Other' consists of Screwfix
International, NeedHelp, and franchising and
wholesaling.
Section 3: France performance
and profitability plan
Background
In June
2020, we set out a plan to 'fix' strategic and operational issues
faced by our banners in France, emanating from previous years. This
included putting in place new leadership and teams, making
significant improvements in our technology, supply chain and
logistics operations, and restoring more local autonomy to manage
the business needs and requirements of our banners in France
(including broadening product ranges, implementing new trading
approaches, and investing in price at Brico Dépôt). Castorama also
closed nine underperforming stores.
In
September 2022 we said that the 'fixes' in France were largely
complete - resulting in clear differentiation between Castorama and
Brico Dépôt, more competitive prices, better product availability,
higher levels of customer satisfaction, and a significant
improvement in our sales performance relative to the market (as
measured by Banque de
France* data). These measures also enabled us to
successfully navigate the banners through the COVID pandemic, as
well as more recent macroeconomic and consumer
challenges.
Over the
last four years we have also put into place more strategic
initiatives, consistent with our 'Powered by Kingfisher' strategy,
to move forward the long-term customer propositions for Castorama
and Brico Dépôt. These included accelerating the e-commerce
capabilities of our French banners (including the creation of a
'hub' store network to facilitate faster fulfilment, and
introducing more C&C options) and further differentiating
Castorama and Brico Dépôt's offer through leveraging Kingfisher's
OEB capabilities. In addition, we have started to develop the trade
customer proposition at both banners, trialled new compact store
formats, started a new retail media business, and developed more
comprehensive in-store and digital services for our customers,
including through the use of Kingfisher's data and AI
capabilities.
Our French
banners have also been active in structurally lowering their cost
base across multiple areas, including in supply chain and
logistics, property, GNFR and overheads. Over £150m of cost has
been structurally removed from the businesses over the last four
years. Furthermore, against the backdrop of an uncertain consumer
environment in more recent times, they have continued to actively
manage variable costs to better align to trading conditions. This
has included strengthened actions around staff costs and
discretionary spend, which in H2 23/24 resulted in an operating
cost reduction of 4.4% YoY, despite significant pay rate and energy
inflation.
Taking France to the next
level - a new plan focused on simplicity, performance and
profitability
With our
banners well positioned both strategically and operationally, we
are today announcing a new plan for Castorama and Brico Dépôt,
designed to drive the next level in our performance and
profitability in France.
The plan is
centred on three focus areas:
· Simplifying the France
organisation,
· A clear and actionable plan
for Castorama, and
· Building on the exciting
potential of Brico Dépôt
These
actions support a medium-term
retail profit margin target for France of c.5% to 7%, and
are explained in detail below.
Simplifying the France
organisation
With clear
strategies in place for Castorama and Brico Dépôt, the time is
right to simplify the structure in France to make banner
decision-making more agile - similar to the proven model in the UK
& Ireland:
· Effective from the end of April 2024, the 'France'-level
management structure will be dissolved, allowing our banners more
autonomy and speed to make operational decisions and allowing for
more streamlined head office operations
· France-level joint operational responsibilities including
human resources, finance and supply chain will be transferred to
the two banners where appropriate
· A
limited number of cross-banner functions will be managed across
banners to maintain joint synergies where efficient; for example,
in the area of retail media
· Leadership changes:
- Alain
Rabec, CEO of France, will retire at
the end of September 2024. Alain joined Kingfisher in October 2019
and has overseen the significant progress made by both banners
described above. We thank Alain for his many contributions to
Kingfisher and wish him well
- Pascal Gil
will become CEO of Castorama France at the end of
April 2024. He will remain a Kingfisher Group Executive team
member. Pascal started his career at Castorama France, before
leading Brico Dépôt Iberia and then Brico Dépôt France, before
taking the role of CEO of Castorama Poland in April 2022. Details
of Pascal's successor as CEO of Castorama Poland will be announced
in due course
- Laurent Vittoz
will continue as Managing Director of Brico Dépôt,
supported by Alain Rabec who will remain on the Kingfisher Group
Executive team until his retirement
A clear and actionable plan
for Castorama France
Despite
making significant progress over the last four years, Castorama's
retail profit margin % remains lower than the Group average, and
also that of Brico Dépôt France.
We have
developed a plan with three core
priorities to boost Castorama's performance, strengthen its
resilience, and drive up its profitability over the medium term:
(1) restructuring and modernising
the store network, (2)
improving operating margin efficiency and (3) growing sales densities.
1)
Restructuring and modernising the store network
Castorama
operates 95 stores in France, of which we have assessed approximately one third as
our lowest performing stores. We are today announcing a
store restructuring and modernisation plan to address these stores
over the medium term. In FY 24/25, we will commence work on 13 of
our lowest performing stores under one of four main
pathways:
· Rightsizing
- we have identified several 'big-box' stores
across the low-performing Castorama portfolio where we have surplus
space. This is based on our analysis of store economics, but also
demand in the local area, proximity to other stores, and the number
of stores we need to achieve national coverage for home deliveries,
as part our e-commerce strategy. Over the last two years we
successfully rightsized two Castorama stores with encouraging
results. These rightsizings resulted in an average space reduction
of c.25% (taken over by discounter retailers, thereby driving
incremental traffic), sales density improvements of c.40%, and a
c.600 basis points improvement in the stores' retail contribution
margin % and an anticipated payback on investment within four
years. We will commence the rightsizing of three Castorama stores
in FY 24/25
· Modernising store
formats - we successfully carried
out a pervasive Castorama store refit in FY 23/24. Over a six-month
period between September 2022 and March 2023, we modernised the
Castorama Englos store by reorganising the layout from 130 aisles
to just six key areas, making the customer journey simpler while
creating a fresh and 'open plan' store environment, with a focus on
design inspiration and home improvement projects. Significant
improvements were also made to in-store digital and fulfilment
services, the trade customer experience, and showcasing our energy
efficiency ranges and services. We expect payback of our investment
within four years. The refreshed Englos store has delivered strong
results including significantly improved sales growth, strong
'big-ticket' sales, higher customer traffic and NPS scores, and in
FY 23/24 became one of Castorama's top 10 performing stores. We are
planning to repeat the refit successfully applied at Englos to one
further Castorama store in FY 24/25, with six additional
low-performing stores benefiting from a refresh
· Brico Dépôt
transfer - over the last three
years, Castorama has successfully converted two of its
low-performing stores into the more profitable Brico Dépôt format.
Our Pontault-Combault conversion saw a reduction of selling space
of c.50%, a more than doubling of sales densities and a significant
uplift in profitability. While these conversions have delivered
encouraging results, there is a limit to the number of Castorama
transfers that can be completed given the size of Castorama stores
(relative to Brico Dépôt) and the proximity to existing Brico Dépôt
stores. We are planning to transfer one Castorama store to a Brico
Dépôt format in FY 24/25
· Franchising
- the franchise model is commonplace in the French
home improvement industry, and in French retail in general. Under
the model, Castorama would transfer the management of store
operations to a franchisee partner, along with the right to use the
Castorama brand, in exchange for a royalty fee. The franchisee
would also leverage Kingfisher's capabilities, including its store
technology systems, leading OEB product ranges (via wholesale), and
Group buying scale. All store operating costs - such as staff and
property costs - would transfer to the franchisee. The franchisee's
focus would be to grow sales, reduce shrinkage and improve
operating efficiencies to drive higher profitability. Longer term,
franchising also gives us the optionality to expand our footprint
in geographic 'white spaces' and smaller catchments in a
capex-light manner. We are planning to test the franchise model in
two Castorama stores in the next 12 months, with an immediate focus
on finding the right franchise partner and optimising commercial
and financial terms
2)
Improving operating margin efficiency
The second
core priority for Castorama is to further improve operating
efficiency through strengthening its cost reduction plan,
leveraging Kingfisher's AI and data-driven solutions, and scaling
Kingfisher's higher margin initiatives around e-commerce
marketplace and retail media:
· Strengthening cost reduction
plan - as discussed above, Castorama
France has made strong progress in lowering its cost base across
multiple areas. Significant opportunity remains to become even
leaner. Our focus areas include:
- Store
productivity - further optimising
store operations in line with seasonal changes in demand, and
process improvements through increased use of technology such as
self-checkout terminals and use of electronic labels
- Procurement & other
costs - continuing to reduce energy
usage, strengthening security measures in-store to reduce
shrinkage, and adopting optimised, system-enabled procurement
practices to drive buying efficiency and scale
- Head office
costs - more efficient head office
operations, in line with the simpler management structure in
France
- Supply chain and
logistics - further increasing the
use of cross-docking sites to facilitate the movement of inventory
from manufacturers to stores (with little or no storage required at
distribution centres), and the reduction of logistics space through
inventory reduction
· Leveraging markdown,
clearance and promotional effectiveness solutions
- Castorama plans to implement Kingfisher's
AI-driven solutions in FY 24/25. Following successful
implementation at B&Q in FY 23/24, these solutions have
resulted in improved sales, gross margin % and sell-through of
stock. Please refer to 'Build a
data-led customer experience' in Section 4 for further
details
· Scaling higher margin
initiatives - in FY 23/24, we signed
a Group-wide partnership with CitrusAd to enable advertising for
product display and sponsored search. Castorama was the first
banner to launch this proposition, generating advertising income
through its retail media. In H2 23/24, Castorama began marketing
retail media to all its suppliers. We believe retail media has the
future potential to reach up to 3% of e-commerce sales as it scales
- please refer to 'Build a
data-led customer experience' in Section 4 for further
details. Following successful launches at B&Q and Brico Dépôt
Iberia, Castorama France launched its e-commerce marketplace in
March 2024, and will prioritise scaling up the proposition in FY
24/25 to deliver sales of 3P products, incremental 1P sales,
increased traffic, new customers to Castorama and, over time, a
high incremental profit contribution. Please refer to 'Accelerate e-commerce through speed and
choice' in Section 4 for further details
3) Growing
sales densities
The final
core priority is to leverage Kingfisher's capabilities in OEB,
e-commerce marketplace, trade and energy efficiency to grow sales
densities:
· Wider ranges and
marketplace - Castorama will
leverage Kingfisher's OEBs, as well as leading national and
international brands, to significantly extend its product offer
over the next three years with a focus on key categories where they
have market share leadership, ranges where there is scope for
differentiation, and energy efficiency ranges. This will be
complemented by additional 3P SKUs made available via the launch of
Castorama's e-commerce marketplace, significantly expanding
Castorama's current offer of c.70k products
· Growing trade
penetration - Castorama will
leverage Kingfisher's trade 'Centre of Excellence' to grow trade
customer penetration, and has developed a plan to increase the pace
of trade tests, supported by the launch of a trade loyalty
programme in FY 24/25. In H1, Castorama will test dedicated trade
counters and sales partners in up to 20 stores
· Capture demand for green
renovation - Castorama will focus on
offering new energy efficiency product ranges and services to make
green renovation projects easier and more accessible for customers,
including introducing new project design and funding simulation
tools. Over time, energy and water efficiency product zones will be
installed in stores with dedicated staff showcasing our ranges and
services. In-home 'energy audit' services will be made available
from all stores and online in early FY 24/25 to help customers
identify opportunities to save energy in their homes through the
purchase of our products. In FY 24/25, we will pilot customer
service initiatives to make state subsidies easier for customers to
access. We will also extend our network of installers to support
renovation projects
Building on the exciting
potential of Brico Dépôt
Brico Dépôt
is one of the world's leading discount home improvement retailers.
As described above, significant work has taken place to restore
Brico Dépôt's 'discounter DNA' - including introducing new
value-oriented ranges, investing in price and trading events - and
the business has a much leaner operating model.
As the
business now enters its next stage of growth, Brico Dépôt has
aligned its strategy across four
key priorities to further enhance its
performance:
· Driving LFL
sales - Brico Dépôt will broaden its
product ranges by introducing more OEBs at lower price points, and
more products aimed specifically at the trade customer and energy
efficiency. To strengthen its price leadership, the business will
seek to further invest in price in certain key ranges. The business
will also strengthen its promotional activities to boost in-store
traffic and sales conversion, including the return of its annual
printed catalogue and more loyalty-driven marketing
· Capturing the trade
opportunity - growing trade customer
penetration is a priority for Brico Dépôt. The business launched 24
trade tests in FY 23/24 to provide a differentiated proposition to
trade customers including dedicated trade desks, customer service
experts and a new trade loyalty programme. Early results have been
very positive, more than doubling trade sales penetration in the 24
stores. The programme will be rolled out to the entire Brico Dépôt
France network in FY 24/25. Please refer to 'Develop our trade business' in
Section 4 for further details
· Testing and optimising the
1,000 sqm compact store format -
Brico Dépôt successfully opened its first compact store in Cahors,
France, followed by a further store opening in H2. The concept
allows customers to access the entire core Brico Dépôt range (c.11k
SKUs) in an area of under 1,000 sqm, with a separate space to allow
larger and bulk purchases to be collected. Customer reaction has
been positive to date, with the focus in FY 24/25 on optimising the
proposition. Please refer to 'Roll out compact stores' in Section 4
for further details. Assuming the format is validated, Brico Dépôt
France is well positioned to penetrate more of the geographic
'white spaces' that exist in France. Brico Dépôt may also consider
the franchising model as an option for the expansion of its
network
· Further improving costs and
productivity - Brico Dépôt has
started to deploy numerous projects to accelerate store
productivity including electronic price labels in our stores (to
allow price changes to be implemented more efficiently) and the
implementation of self-checkout terminals. These projects will be
rolled out across the Brico Dépôt France network in FY 24/25. We
are also continuing to optimise store colleague operating models,
with a more tailored approach to serving seasonal changes in
demand. In addition, with the support of Kingfisher, the business
is continuing to drive structural cost savings in the areas of
supply chain and logistics and GNFR. Please refer to 'Human, agile and lean' in Section 4
for further details
Section 4: Strategy
update
Better Homes. Better Lives.
For Everyone. At Kingfisher, we believe a better world starts with
better homes and we strive to help make that
happen.
Put simply,
our strategic plan - 'Powered by
Kingfisher' - aims to maximise the benefits of combining our
distinct retail banners
(which serve a range of different customer needs) with the
scale, strength and expertise of
the Kingfisher Group.
The
differentiation of our retail banners across trade (Screwfix,
TradePoint), discounters (Brico Dépôt France, Brico Dépôt Iberia),
and more general DIY* needs (B&Q, Castorama France, Castorama
Poland, Brico Dépôt Romania, Koçtaş) is a unique strength for us;
more so in a more volatile and uncertain world. Equally,
Kingfisher's scale and resources are a critical source of
competitive advantage for our banners, providing product
development and supply (through our industry-leading own exclusive
brands), access to leading-edge technology, digital and data
capabilities, as well as international support, sourcing and buying
scale.
We are
continuing to invest for growth in multiple areas of the business,
underscoring our confidence in the medium to longer-term outlook
for home improvement growth in our markets. We are pleased with the
progress we have made over the last year, against the backdrop of
what remains an extraordinarily challenging macroeconomic and
consumer environment in our markets.
The
following section covers the progress made in FY 23/24 against
our strategic plan:
a)
Grow by building
on our different banners
b)
Accelerate
e-commerce through speed and choice
c)
Build a data-led
customer experience
d)
Differentiate and
win through own exclusive brands (OEB)
e)
Develop our trade
business
f) Roll out compact store
formats
g)
Lead the industry
in Responsible Business and energy efficiency
h)
Human, agile and
lean
a) Grow by
building on our different banners
Our retail banners occupy
number one or two positions in our key markets.
These banners
address a diverse range of customer needs, each operating different
models tailored to these needs, with clear positionings and plans.
Our goal is to grow by building on our different formats in
existing and new markets, leveraging the power of Kingfisher. We
believe net space growth will drive an uplift in sales of c.+1.5%
to +2.5% per annum over the medium term.
B&Q
· Successfully rolled out new 'B&Q Local' sub-branding
across its high street stores, with 10 such stores currently open
across London. 'B&Q Local' stores address the customer needs of
immediacy and convenience in locations with high footfall. We will
continue to optimise the format's offer and trading strategy in FY
24/25
· Opened
two new 'B&Q Local' stores in FY 23/24 and closed all eight of
its 'grocery concession' format store tests
· We
believe there are around 50 catchments or geographic 'white spaces'
in the UK where B&Q is currently under-represented.
Please refer to 'Roll out compact store formats' below
for further details of B&Q's evolving store
footprint
TradePoint
· B&Q's trade-focused banner, TradePoint, opened
21 new trade counters in FY 23/24, extending its
presence within the B&Q store network to 209 (67% of
stores)
· TradePoint will begin tests in FY 24/25 to increase
TradePoint's presence in smaller stores. Please refer to
'Develop our
trade business' below for further
details of TradePoint's progress
Screwfix - UK &
Ireland
· Opened
51 stores, including 46 in the UK and five in the Republic of
Ireland, bringing the total number of stores to 922 in both
countries as of 31 January 2024
· Planning for up to 40 new stores in the UK & Ireland in FY
24/25, keeping it on track to reach its medium-term goal of over
1,000 stores
Screwfix -
International
· Screwfix is very well positioned to address the light-trade
segment in France, which has an estimated total market size of
c.€30bn. During the
year, Screwfix opened 15 stores in France, bringing its total to 20
stores in operation as of 31 January 2024 (with a further
two stores opened post year-end)
· Pleased with the customer reaction to date, with the business
recording strong store net promoter scores (on par with Screwfix UK
stores), and national brand awareness on par with our closest
competitor in France. During the year we expanded our product range
to c.14k SKUs, and widened our proposition by launching third-party
trade credit and Sprint
one-hour home delivery services
· Planning to open up to 15 stores in FY 24/25 with a continued
focus on growing brand awareness
· Assuming the success of the format is confirmed, we see the
potential for more than 600 stores in France over the longer
term
· Launched Screwfix as a pure-play online retailer in six
European countries (Poland, Spain, Belgium, the Netherlands, Sweden
and Austria) leveraging Screwfix's
distribution centre in France for fulfilment. Encouraged by the
initial reactions and we continue to refine our proposition for
these markets. Over the longer term, we intend to serve up to 20
European countries via this approach
Castorama
France
· Please
refer to 'France performance and
profitability plan' in Section 3 for further
details
Brico Dépôt
France
· As one
of the home improvement industry's best hard discounters, Brico
Dépôt France is well positioned to penetrate more of the geographic
'white spaces' that exist in France
· Opened
its first two compact stores in FY 23/24 - an innovative 1,000 sqm
format. Positive customer reaction to the format to date, with a
focus in FY 24/25 on optimising the proposition
Castorama
Poland
· Opened
five stores in FY 23/24 (three big-box, one medium-box and one
compact 'Castorama Smart' store). Planning to open a further five
stores in FY 24/25
· Castorama plans to address the attractive market growth
opportunity and significant 'white spaces' in Poland through the
opening of up to 75 medium-box and compact stores over the next
five years
Koçtaş (Kingfisher's 50%
joint venture in Turkey)
· We
believe the longer-term growth opportunity for the home improvement
industry in Turkey is significant. Net of store closures, Koçtaş
added 13 new stores (one big-box and 12 compact) in their financial
year to 31 December 2023, bringing its total store count to
368
b)
Accelerate
e-commerce through speed and choice
We will continue to grow our
e-commerce sales and participation, with the ambition of reaching
30% of Group sales from e-commerce channels (one third of which
from marketplace). We will do this by offering our customers
'speed' - faster fulfilment of orders through leveraging our store
estate - and 'choice' - broader product choice, including via our
e-commerce marketplace propositions. This will be supported by the
ongoing modernisation and simplification of our technology
landscape, which is unlocking the rapid development of more
customer-centric and personalised mobile apps, digital tools and
services.
FY 23/24 performance
highlights
· Total
e-commerce sales, which include gross sales from third-party (3P)
e-commerce marketplace transactions, as well as 1P e-commerce
sales, reached £2.3bn in FY 23/24, an increase of 6.4% YoY (in
constant currency). Driven by strong marketplace sales growth at
B&Q and higher 1P e-commerce sales at Screwfix and both banners
in France
· Overall e-commerce sales penetration was 17.4% (FY 22/23:
16.3%; FY 19/20: 7.9%)
· Click
& collect (C&C) sales up 1% YoY, accounting for 67% of
total e-commerce sales (FY 22/23: 71%) and 88% of 1P e-commerce
orders (FY 22/23: 87%)
· Home
delivery sales up 20% YoY, reflecting the development of our
e-commerce marketplace and same-day delivery
propositions
· 93% of
the Group's 1P e-commerce orders were picked in-store (FY 22/23:
91%); excluding Screwfix: 87% (FY 22/23: 89%)
· Mobile
sales up 8% YoY, accounting for 59% of our 1P e-commerce sales (FY
22/23: 55%). Mobile app sales up 41% YoY
· Marketplace GMV* of c.£200m for B&Q (includes VAT and
returned and cancelled orders). B&Q marketplace gross sales of
£154m for the year, representing marketplace participation of 31%
in FY 23/24 (i.e., B&Q's marketplace gross sales divided by
B&Q's total e-commerce sales). Marketplace participation of 13%
at Brico Dépôt Iberia
Leveraging our store estate
to offer customers speed and convenience
· Store-based
fulfilment - moving
to store-based picking and fulfilment over the
last four years has been critical in enabling us to serve customers
more efficiently. 53 B&Q stores are being used as 'digital
hubs' for fulfilling home deliveries, serving nearly 100% of the
UK. These hub stores were selected based on their catchment and the
depth of their in-store range. During the year we made order
preparation even faster by carrying out an extensive benchmark of
C&C practices across our banners, with recommendations for
improvement by an external party. This has driven significant
decreases in pick times across the Group. We also made enhancements
to our digital colleague apps, resulting in optimised picking
routes and more accurate stock levels being displayed online. This
contributed towards an 8% reduction in online order cancellations
at B&Q and Castorama France
· Click &
collect - our banners continued to
make enhancements to their respective C&C customer journeys to
improve speed and convenience. C&C is our most popular online
fulfilment option and our new store format trials are also
increasing C&C options for customers, particularly our high
street compact stores. Castorama Poland now defaults all C&C
orders to collection from its store locker network, increasing
customer convenience with 24/7 collection availability
· Home delivery
- we are gradually introducing more options around
same-day, next-day and specific-day delivery options. We continue
to expand the Screwfix Sprint service in the UK (which offers
delivery direct to home or site within one hour), which is now
available in 334 stores, covering around 45% of UK postcodes.
During the year, Screwfix began advertising the proposition widely
through television, radio, press, website and in-store campaigns,
resulting in a significant increase in customer awareness of the
service, and recruiting more than 25k customers using it for the
first time, contributing to an increase in Sprint sales of over 100% YoY. The
offer has proven particularly popular in London, accounting for
more than 60% of Sprint orders. In November 2023, Screwfix
partnered with Deliveroo
to offer a limited range of Screwfix products on-demand
· Online customer
journey - to enhance our customers'
online experience, we have simplified our technology architecture,
enabling changes to be made faster to our technology products and
platforms. During the year we implemented Fasterize, a software-as-a-service
solution, in Castorama France following successful implementation
in Brico Dépôt France, leading to a 30% improvement in Castorama's
web and mobile speed and page-load times, and a 10-point
improvement in customer NPS. In FY 23/24, Brico Dépôt France's 1P
e-commerce sales grew the fastest of all our banners in the Group.
Our priority in FY 24/25 is to deliver core architectural
modernisation to our search and browse pages (from the homepage
through to product pages) across B&Q, Castorama France and
Castorama Poland. This will drive further site speed improvements
for our customers
Offering our customers more
choice on what they shop and how they shop
· Customer payment
options - implemented 'Buy Now, Pay
Later' and 'Pay in Instalments' options, available via PayPal, in the UK and France. At
B&Q, we implemented a new third-party credit solution offering
flexible credit, allowing customers to decide when and how they
repay their credit loans
· Mobile
- mobile remains our largest and fastest-growing
channel (versus desktop and tablet). During the year we tested
various mobile and app-exclusive events to drive sales and further
mobile penetration. For example, in Q4 Castorama France launched
app-exclusive offers which increased e-commerce participation by
25% YoY, with app sales accounting for almost half of all
e-commerce sales during the promotion. Earlier in the year Screwfix
integrated Braze, a 3P
customer relationship management (CRM) platform, into the Screwfix
app to deliver personalised offers and deals for their most
frequent trade customers. Our key mobile priorities for FY 24/25
are to further improve app capabilities across the Group, and
optimise our mobile marketing and trading strategies
· Marketplace
- during the year we continued to scale our
e-commerce marketplaces at B&Q and Brico Dépôt Iberia,
leveraging the Kingfisher platform built in conjunction with our
key partners Mirakl and
Salesforce. We are
building leading marketplace propositions for our customers by
directly connecting with the best global home improvement
merchants, leveraging strategic partnerships with third-party
aggregators such as Octopia, Channel Advisor, ShoppingFeed, BeezUp, Linnworks and Just Applications. At B&Q, there
are now approximately 1,100 carefully selected 3P merchants live on
diy.com, with products
across all home improvement categories, enabling B&Q to offer
over 1.2 million additional home improvement SKUs compared to its
previous 1P offer of c.40k products. In FY 24/25, B&Q aims to
reach c.2 million SKUs. Brico Dépôt Iberia's marketplace is also
growing rapidly, reaching 100k SKUs via over 150
merchants
· Marketplace strengthening our
1P business - the diversity of SKUs
offered by the marketplace is highly complementary to our existing
1P offer. Bed frames and mattresses were among our top-selling
marketplace products in FY 23/24, making furniture one of the
largest categories, both in sales and in assortment size (c.100k
products). In FY 23/24, 50% of people who purchased a marketplace
product were new customers who had never shopped with B&Q
before. We also saw that approximately 10%
of customers who purchased a 3P marketplace product for the first
time subsequently purchased a 1P product on diy.com. As the marketplace matures
and customers become more familiar with using it, we expect this
'transference' rate to continue growing, increasing the strategic
value for our banners
· Marketplace
priorities - Kingfisher developed
its marketplace technology with low-cost scalability in mind.
Following the successful launch at B&Q in March 2022,
e-commerce marketplaces were subsequently rolled out at Brico Dépôt
Iberia in November 2022 and at Koçtaş, our 50% joint venture, in Q1
23/24. We successfully launched Castorama France's e-commerce
marketplace earlier this month, which we believe will drive higher
sales densities, and greater resilience and profitability over the
medium term. Please refer to 'France performance and profitability
plan' in Section 3 for further details. We are also aiming
to launch marketplace at Castorama Poland in the coming months. Our
priorities this year also include the opening of B&Q's
marketplace to non-UK sellers as well as the launch of a retail
media proposition for marketplace sellers. Over the longer term,
our ambition is to reach 30% e-commerce sales penetration, with one
third of this representing marketplace gross sales
c)
Build a data-led
customer experience
Powered by Kingfisher, our
banners are leveraging data and artificial intelligence (AI) to
build customer-centric tools and solutions, support better
commercial decision-making and higher productivity, thereby
unlocking significant new sources of revenue, profit and cash. In
addition, with c.1bn customer visits per annum across our
e-commerce touchpoints, we believe that many of our suppliers -
including leading national and international home improvement
brands - could become advertisers. Over time, we see the potential
for retail media revenues to reach up to 3% of the Group's total
e-commerce sales.
We are
seeing strong results from our in-house data and AI capabilities,
and are continuing to invest in these areas. We have adopted more
efficient ways of working to allow us to test and learn quickly. To
support internal development, we have invested in new technologies
including Nucleus, our
Group-wide data platform which gives us simpler access to
Kingfisher's data via a centralised repository. We have also
developed an in-house AI engine called Athena. Athena helps Kingfisher manage and
integrate multiple AI technologies, allowing us to quickly adopt
new AI tools as they are developed.
We have
aligned our data strategy across four key pillars: top-line growth, strengthening margin, streamlining operations and
new income
streams.
Top-line
growth
· Recommendation and
personalisation engines - Kingfisher
has developed a suite of solutions to offer best product options
across multiple channels (including web and app) in multiple
formats such as 'frequently bought together' carousels, 'substitute
products' or direct personalised offers based on customer shopping
trends and preferences. During the year we introduced these
recommendation engines to B&Q (including TradePoint), Screwfix,
Castorama France and Brico Dépôt Romania. B&Q, where the
solutions have been in place the longest, has seen over 10% of its
e-commerce sales derive from product recommendations. Our
recommendation engine has driven a more than 100% increase in web
sales from product recommendations compared to our legacy
third-party solutions. Results in-app have also been strong,
generating twice the conversion of web recommendations
· Customer
marketing - during the year, B&Q
and Screwfix deployed new CRM capabilities powered by Braze, enabling the management of
customer relationships through specific promotions and personalised
offers sent by email, SMS and in-app notifications. Screwfix
subsequently ran multiple app-based campaigns offering incentives
based on shopping frequency, with very strong results
· E-commerce
support - in Q3, Castorama France
launched 'Hello Casto', a
new digital virtual assistant that uses generative AI, powered by
our in-house AI engine, Athena. Customers can converse
directly with 'Hello
Casto' online and receive tailored advice and
recommendations for their home improvement projects. In February
2024, 'Hello Casto'
received industry recognition, having been awarded the Gold Prize
for Innovation by the French e-commerce trade association,
FEVAD
Strengthening
margin
· Optimising markdowns and
clearance - Kingfisher has developed
powerful new AI-based solutions to support the optimisation of
markdown and clearance processes in-store and online. These tools
were piloted at B&Q during H1 and, following successful early
results, fully implemented during H2. The pilots delivered
encouraging gross margin % improvements, while also increasing the
sell-through of seasonal stock and improving the efficiency of
range changes. We plan to roll out at Castorama France in FY 24/25,
followed by Castorama Poland
· Promotional
effectiveness - our AI capabilities
were also leveraged to develop solutions to forecast, assess and
optimise promotional effectiveness. Using AI to simulate the
potential impact of different promotional levers allows our banners
to compare the efficacy of various promotional mechanics and
measure performance on a consistent basis. Following implementation
at B&Q, over 300 events have been planned using this solution
since launch, resulting in improved sales, gross margin % and
sell-through of stock. Roll-out to other banners is planned in FY
24/25, starting with Castorama France and then Castorama
Poland
Streamlining
operations
· Supply chain
transparency - earlier this year
Kingfisher developed a supply chain visibility tool (SVT) to
provide our banners with real-time and end-to-end visibility of
products, from receipt at origin ports all the way to arriving at
stores. This transparency over the supply chain enables our banners
to reduce inventory levels and replenishment cycles by optimising
the time between products being ordered and arriving at stores and
distribution centres. Over time, we believe this will result in
higher product availability, lower inventory days, less working
capital requirements and higher profitability. The tool has been
implemented in all our markets across the Group, with live
reporting helping our teams to pinpoint issues and identify
resolutions quickly, allowing availability challenges to be
addressed more efficiently
· Forward
visibility - SVT is also enabling
our banners to provide forward visibility to our suppliers by
sharing our data and allowing collaborative planning. We are
currently sharing data with 45 OEB vendors representing
approximately 30% of OEB sales. So far this has resulted in
substantial reductions in average lead-times and minimum order
quantities, and a reduction in inventory days for the in-scope OEB
vendors
· Demand
forecasting - Kingfisher also
developed a forecasting algorithm powered by AI for use initially
at our French banners, to improve demand forecast accuracy. Early
results are encouraging, showing a significant improvement in
forecast accuracy. In FY 24/25 we aim to embed these new
capabilities into more of our banners
New income
streams
· Retail media
- we believe there is a significant opportunity to
create a proposition for 3P vendors who want to purchase
advertising through retail media and use data to improve their
offering
· During
the year we established a Group partnership with
CitrusAd, a market-leading
technological solution that Kingfisher will use to manage the
advertising proposition for 3P vendors. To
accelerate our plans, in H1 we also partnered with
Unlimitail, a new European
retail media joint venture between Carrefour
and Publicis, to provide advertising sales support in France, Poland and
Iberia
· Our
retail media operations were launched at Castorama France in H1,
and went live at B&Q in H2, with multiple vendors now
advertising via our e-commerce channels. Other banners will follow
suit in FY 24/25. Our priorities also include launching a retail
media proposition for marketplace sellers
· Over
time, we see the potential for retail media revenues to reach up to
3% of the Group's total e-commerce sales
d) Differentiate
and win through own exclusive brands (OEB)
Our OEB product development
is a significant source of value for our retail banners and their
customers. OEBs provide us with the ability to differentiate
ourselves from the rest of the market by delivering simple and
innovative solutions at affordable prices, with a focus on reducing
environmental impact. OEBs also carry a higher gross margin (on
average) than branded products. We aim to grow our OEB sales
further as we bring even more innovative and affordable solutions
to our customers.
FY 23/24 performance
highlights
· Total
OEB sales of £5.7bn, representing 45% of Group sales (FY 22/23:
45%)
· We
consider this a resilient penetration rate considering our focus on
offering more choice through a wider range of local and
international branded products, including from our e-commerce
marketplace proposition
· LFL
sales of our OEB ranges were down 4.6%, impacted by the performance
of outdoor and 'big-ticket' categories (kitchen, bathroom &
storage), with both categories having a relatively higher weighting
towards OEB products. We saw a resilient performance from OEB
ranges within our tools & hardware and building & joinery
categories
· Key
five OEBs (GoodHome,
Erbauer, Cooke & Lewis, Verve and Magnusson) contributed 21% of total
Group sales (FY 22/23: 20%)
· In FY
23/24, 60% of OEB product sales were Sustainable Home Products
(SHPs) (FY 22/23: 56%) and our target is to reach 70% by FY 25/26.
Please also refer to 'Lead the industry in
Responsible Business and energy efficiency'
below for further details on how we are leveraging
our OEBs to drive further SHP growth, while supporting efforts to
reduce our scope 3 emissions footprint
· Range review
successes - our recent OEB range
reviews have landed well with customers. One of the most successful
range refreshes carried out in the last 12 months was GoodHome baths, delivering sales
growth of c.6% YoY following the launch of the new range. Our
refreshed OEB wood fencing ranges were also successfully
implemented in our French banners in the year, with positive sales
results versus the predecessor ranges
· Award-winning
OEB - our industry-leading OEB
design capabilities continue to be recognised internationally, with
our Cascabel kitchen tap and
Neva decking solutions both
winning prestigious Red Dot
design awards in the year
We continue
to focus on OEB development with our three strategic pillars in
mind: innovation, affordability
and reducing environmental
impact. All new product launches and
range reviews stringently address each of these three
pillars
· Innovation
- whatever task our customers are aiming to
complete, we seek to make it easier for them. We do this by
acquiring a deep understanding of their needs and frustrations, and
filling the gap in the market today. Our focus on innovation
through product development is achieved by measuring how well the
product does the job it is designed to do, and how the product is
simplifying or enhancing the experience for our retail and trade
customers. A recent example is our 'Air Tech' technology featured in the
Erbauer 16oz claw hammer,
which reduces shock and vibration from use. Erbauer is now Kingfisher's number one
brand for tools, ahead of several renowned international brands.
Other examples include our GoodHome vinyl flooring solution with
its easy-to-install 'click' installation system, and our
GoodHome 'EasyRoll'
wallpaper which only requires water for application, removing the
need for glue. Our recently launched Site workwear product lines for female
trade professionals has been very successful, building on customer
insights to serve a previously unsupported segment of the
market
· Affordability
- we aim to reach millions of customers by
providing the most affordable solutions in the market. We target
our OEB products to be, on average, 15-30% cheaper than branded
products. For example, our GoodHome durable paints and
Erbauer combi drills are
both c.30% cheaper versus their equivalent branded products, and
are significantly outpacing them on sales growth. We achieve this
by strengthening the offer in the lowest selling price quartile and
opening price points, and using value engineering to gain
manufacturing efficiencies and economies of scale. For example,
during the year we re-engineered our GoodHome garden furniture range which
enabled us to relocate production from China to Turkey, leading to
lower manufacturing costs and reduced delivery
lead-times
· Reducing environmental
impact - we are committed to
providing solutions to our customers to help them live more
sustainably. We continue to embed environmental considerations at
the core of the OEB proposition, all the way from the product
design and development phase, through to the procurement and
manufacturing phase. By doing this, we aim to empower customers to
make a sustainable choice without compromising on cost or
comfort
- Our
Sustainable Home Products
(SHPs) aim to either help our customers reduce the impact of their
homes on the environment (such as water-saving taps or loft
insulation) or to reduce the impact on the environment because of
their input materials or how they are manufactured (for example,
FSC-certified timber, peat-free compost or recycled plastic).
Through our OEB team's design and development work, we are focused
on driving up product attributes that meet these requirements. As
an example, our new GoodHome paintbrush handle and roller
are manufactured with 100% recycled plastic, a first in the
industry. In H1 we launched Naturéa by GoodHome, our first paint range
containing resins made from renewable raw materials (as opposed to
fossil fuels)
- In FY
23/24, we launched our Green Star product marker programme at
B&Q, Screwfix and Castorama Poland for an initial 8.5k SKUs,
with the aim of making it easier for customers to identify and
purchase products that have a reduced impact on the environment.
Our priority in FY 24/25 is to extend the Green Star marker to a broader
population of SKUs, and continue the roll-out to all our
banners
e) Develop our
trade business
Trade customers are an
integral part of the home improvement ecosystem and a key priority
for Kingfisher. Trade customers tend to visit more frequently and
spend more than the average retail customer. The significant
opportunities to engage further with trade customers include the
further roll-out of trade counters and expansion across our
banners, range expansion and improved merchandising, building
deeper relationships with trade customers, new services, loyalty
programme optimisation and digital enhancements. We are aiming to
reach more than £1bn of sales at TradePoint in the UK &
Ireland, and double trade sales penetration in France and Poland,
over the medium term.
Screwfix is
the UK's number one 'light-trade' retailer. In FY 23/24, the
business continued to expand, opening 46 stores in the UK, five in
Ireland and 15 in France. As of 31 January 2024, Screwfix operated
922 stores in the UK & Ireland, and 20 stores in France where
it launched in April 2021 (with its first store opening in October
2022). In Q3, Screwfix launched as a pure-play online retailer in
six additional European countries. Please refer to 'Grow by building on our different
banners' above for further details.
Through
B&Q's trade-focused banner, TradePoint, we have created a
blueprint for our ambitions in 'heavier trade'. In FY 23/24 the
business delivered £834m in sales, outperforming B&Q retail
with LFL sales of +0.7%, representing 22% of B&Q's total sales
(FY 22/23: 22%). TradePoint has a strong plan to drive its annual
sales to more than £1bn in the medium term, centred around growing
its customer base and increasing its share of trade customer spend
through a greater focus on project-related spend. The business is
also increasingly focused on growing its business-to-business (B2B)
sales, catering to trade federations, professional housebuilders
and small and medium-sized enterprises, with sales in this area up
c.25%
YoY.
More
broadly, we are leveraging our success and learnings to increase
trade customer penetration across our other retail banners. We
recognise the unique needs of trade customers and have therefore
aligned our trade strategy across six key pillars: stores, range and price, people, services, loyalty and digital. Progress against these pillars
is described below.
Stores
· TradePoint opened 21 new trade counters in FY 23/24, extending
its presence within the B&Q store network to 209 (67% of
stores)
· Castorama Poland tested 'CastoPro' in five stores, with
dedicated entrances in three of the stores, providing a dedicated
space to bring together key trade ranges and serve trade customers.
The business plans for a further 10 'CastoPro' areas in FY
24/25
· Launched tests in 37 stores across Castorama France, Brico
Dépôt France, Iberia and Romania to provide a differentiated
proposition to trade customers including dedicated customer service
experts. Early results have been very positive - for example, more
than doubling trade sales penetration in 24 Brico Dépôt France
stores. These tests will be expanded to more stores in FY 24/25,
including a roll-out to the entire Brico Dépôt France
network
Range and
price
· Leveraging our strength in OEBs to develop and launch
trade-focused products for our banners. In FY 23/24 we launched our
Fortress paint and paint
tools ranges, offering a higher durability than traditional paints
as well as high-specification paint accessories. Customer reaction
and sales have been strong to date. We also tailored our
Site workwear product
lines to be more suitable for female trade professionals. Our
plumbing-focused OEB Flomasta range continues to perform
well in the UK with over 500 SKUs to support key plumbing and
heating engineer needs, with planned expansion into our other
banners in FY 24/25
· Continuing to add trade-specific branded products to our
assortment for trade customers; for example, OX hand tools and Bosch power tool accessories at
TradePoint, in line with customer demand
People
· We
believe that dedicated trade colleagues can help us capture a
greater share of trade customer spend, while providing feedback
loops to help optimise our offer. Dedicated TradePoint sales
partners have been recruited in 39 stores to date, aiming to build
more direct and personalised relationships with trade customers.
Early results have been positive, supporting TradePoint's uplift in
LFL sales in H2 to +3.6% (versus H2 LFL of -0.2% for B&Q as a
whole)
· A
similar approach is being taken in certain Brico Dépôt France and
Castorama Poland stores, where we have designated dedicated
customer service experts to engage with trade customers, introduce
them to trade-specific benefits, and encourage sign-ups to their
loyalty programme tests. We have seen positive early results in
these 'pilot' stores, resulting in greater frequency of visits by
trade customers and higher basket values. As noted above, trade
sales penetration has more than doubled in 24 Brico Dépôt France
stores where we have piloted this approach. We will extend the
roll-out of this approach to more stores in the UK, France and
Poland in FY 24/25, including all Brico Dépôt France
stores
Services
· Tool rental
- in December 2023, in partnership with
SpeedyHire, B&Q made
tool hire accessible to all its customers nationwide with the
launch of a new online tool hire service. The SpeedyHire concessions in B&Q
stores have closed, with some space reserved as display areas to
promote the new order-to-home service. In France, Castorama France
partners with Loxam at 41
stores to provide trade customers with heavy machinery and job
specific tools, delivered both in-store and nationwide via home
delivery. Following a successful trial, Castorama Poland has
expanded the trials of its CastoRent tool rental service to 26
stores, providing low-cost access and increasing customer exposure
to our Erbauer and
MacAllister
brands
· Fulfilment
- during the year, nationwide crane delivery was
rolled out at Brico Dépôt France with very strong results.
Direct-to-site delivery, next-day delivery and 'timed delivery'
slots all continue to be tested and further explored across the
Group, according to trade customer demand
· Waste
management - our responsible waste
services in partnership with AnyJunk and LoveJunk are delivering positive
results in the UK
· Payment facilities and
financing - payment facilities and
cashflow are key considerations for our trade customers to
successfully operate their businesses. In Brico Dépôt France, a
deferred payment trial is in the process of rolling out alongside
the national launch of a trade loyalty programme 'Special Pros'. Dedicated third-party
financial products for trade and B2B customers are also being
explored and deployed in Castorama Poland and Brico Dépôt
Iberia
Loyalty
· We
recognise the importance of loyalty programmes to trade customers,
with trials now live in all markets and plans to extend to more
stores in FY 24/25
· TradePoint
- loyalty programme continues to be attractive to
trade customers, with active members +6% YoY. The loyalty card is
now available on Apple
Wallet for easier scanning and faster checkout
· Castorama
France - currently trialling a
loyalty programme similar to TradePoint
· Brico Dépôt
France - launched a trade loyalty
programme in FY 23/24 in 24 stores with strong results. The
programme has now rolled out nationwide, following a national
marketing campaign in February 2024. The cashback programme gives a
2% discount on purchases
· Castorama
Poland - during the year, the
'CastoPro' loyalty
programme was successfully trialled across 18 stores. Early results
showed that these stores outperformed similar sized stores without
a loyalty offer. The loyalty programme was extended to all
Castorama Poland stores in February 2024
· Brico Dépôt
Iberia - the 'BricoPro' loyalty programme in Brico
Dépôt Iberia continues to grow successfully, with sales to trade
customers up c.180% since launch, and significant sales growth YoY
from comparable customers
· Brico Dépôt
Romania - launched cashback trials
via trade loyalty programme
Digital
· Our
C&C and online propositions help trade customers plan and
prepare for their projects so that tools and materials are
available when and where they need them
· Screwfix Sprint
continues to deliver essential items to trade customers within one
hour, available exclusively through the Screwfix app
· As our
loyalty programmes develop, personalisation is a key focus area,
leveraging our expanding data and analytics expertise to bring more
relevant offers and content to known trade customers. Please refer
to 'Build a data-led customer
experience' above for further details
· Castorama Poland is planning the launch of a trade loyalty app
in FY 24/25, giving customers access to a virtual 'CastoPro' loyalty card, displaying
their active discount level and spend required to reach the next
discount tier
f) Roll out compact store
formats
Our home improvement banners
operate over 2,000 stores across eight countries in Europe. They
play an integral role in meeting the demand for fast fulfilment via
e-commerce channels, whether through C&C or delivery, to where
the customer wants it. Compact stores are also playing an
increasingly crucial role in addressing the consumer need for
convenience. Through compact store expansion, our ambition is to
grow market share, optimise our overall store footprint, and to
grow sales densities and store profitability.
A common
denominator through the plans of many of our businesses is that
compact stores are a key enabler for expansion. We are convinced of
the need for a wider network of smaller and more easily accessible
stores, and believe compact stores unlock the opportunity for rapid
expansion into smaller cities and geographic 'white spaces' where
larger stores are not suitable.
While
compact store growth will increase our overall store numbers, our
aim is to reduce the average size of our stores. We aim to achieve
this over time by opening more compact stores (less than 2,000
sqm), rebalancing any larger size new store opening programmes
(e.g., at Castorama Poland) to mostly focus on medium-box stores
(2,000 to 6,000 sqm), and 'rightsizing' or repurposing space within
many of our larger format big-box stores (more than 6,000
sqm).
We are
making good progress in testing different concepts in different
catchments to unlock the compact store opportunity. We now have 27
active tests across three markets and five retail banners (B&Q,
Screwfix, Castorama France, Brico Dépôt France and Castorama
Poland), with nine additional test stores opened in FY 23/24. The
compact stores are in a variety of locations including high
streets, small retail parks, industrial estates and dense urban
areas.
· High street
tests (300-1,000 sqm) - continue to
deliver encouraging learnings and results. We have 14 high street
concept stores open in the UK, France and Poland, including five
stores with two or more full years of trading. B&Q opened two
new 'B&Q Local' stores in FY 23/24 for a total of 10, seeing
high C&C participation (three to four times higher than
non-compact stores) and growth of customers new to B&Q. Similar
concepts are being tested at Castorama France (three
'Casto' stores) and
Castorama Poland (one 'Express'
store). Across all three markets, we continue to
iterate the store tests accounting for local customer needs as we
create an optimum blueprint. In FY 24/25, B&Q will test in
towns and cities outside of London
· Small retail park
tests (800-2,000 sqm) - live at
Castorama Poland under the 'Castorama Smart' sub-banner, since June
2021. The format allows us to bring our core offer into smaller
footprints and catchments, while offering a stronger showroom
inspiration and more complete project journey than is possible
within high street stores. We have a total of six such stores
operating across Poland in a variety of catchments, with one new
'Smart' store opened in FY 23/24 (and one more planned for FY
24/25). The format continues to be adapted and iterated according
to learnings
· Screwfix compact
stores - Screwfix continues to test
its ultra-compact format stores ('Screwfix Collect') to enable
expansion into more urban locations. Trials in central London are
delivering encouraging results, giving customers greater
convenience and access to the full Screwfix range via next day
C&C. A total of five 'Collect' stores were in operation as of
31 January 2024, with four opened in FY 23/24, and we expect to
test more in the coming year
· Brico Dépôt compact
stores - in June 2023, Brico Dépôt
France launched its first compact store in Cahors, France, followed
by a further store opening in H2. The concept allows customers to
access the entire core Brico Dépôt range (c.11k SKUs) in an area of
under 1,000 sqm, with a separate space to allow larger and bulk
purchases to be collected. The format also alleviates various pain
points in the customer journey, saving customers time and effort by
removing the need to take large or bulk items from shelves or
navigating aisles with heavily-loaded trolleys. Assuming the format
is validated, Brico Dépôt France is well positioned to penetrate
more of the geographic 'white spaces' that exist in France.
Customer reaction has been positive to date, with a focus in FY
24/25 on optimising the proposition
g)
Lead the industry
in Responsible Business and energy efficiency
We are committed to leading
our industry in responsible business practices and energy
efficiency. Building on our strong
Environmental, Social, and Governance (ESG) credentials, our
'Powered by Kingfisher' strategy sets out four priority areas for
Responsible Business where we can maximise our positive impact
on the lives of our customers, colleagues, communities, and the planet. As the 'green homes' agenda
accelerates, we see considerable potential for our Sustainable Home
Products.
Our
priorities are underpinned by our commitment to 'Responsible
Business Fundamentals'. These are
the topics and impacts we measure and manage, to
ensure we continue to operate responsibly across our business. We
have clear policies in each of these areas, including health and
safety, responsible sourcing, cybersecurity and data protection,
and ethical conduct, to ensure we take a consistent best practice
approach across our banners.
We continue
to make strong progress against our four Responsible Business
priorities, with key updates noted
below.
Colleagues: Becoming a more
inclusive company
· Remuneration and
support - we continue to closely
monitor the cost of living in each of our markets and, accordingly,
put measures in place to support colleagues in our stores and head
offices. During the year we implemented timely salary increases in
each of our markets and responded swiftly to changes to the
National Minimum Wage or local equivalent, helping Kingfisher
remain one of the most competitive employers on retail store
colleague pay. Our focus on optimising colleague reward saw 2023
employee Net Promoter Scores (eNPS) for reward rise by 12 points,
and wellbeing scores increase by 6 points. We are working towards
implementing measures to ensure even greater pay transparency. A
key part of this approach is to adopt EU Pay Transparency Directive
legislation in line with local legislative
considerations
· Colleague
engagement - we track colleague
engagement through frequent surveys and listening forums at banner
and Group, including through our 17 Affinity Networks. Our
colleague satisfaction scores remain within the top 5% of worldwide
retailers
· Gender
representation - we continue to work
towards our gender representation targets of 40% women in
management roles and 35% women in senior leadership roles by FY
25/26. During the year we made significant progress, reaching
28.6% women in our senior leadership team (FY
22/23: 25.8%) and 39.6% in management roles (FY 22/23:
38.9%). While we are making good progress, we continue to
strengthen our actions and focus on this area across the Group. In
the UK, our latest Gender Pay Gap report, to be published in April
2024, shows a reduction in the median hourly pay gap from 1.1% to
0.8%
· Ethnic
representation - we have set a
target of doubling our ethnic diversity in the UK for group
executive team members and their direct reports, from 8% to 16% by
2030. In line with the Parker Review's recommendations (in the UK)
for ethnic diversity targets to be set for 2027, we've set an
interim target of 12.5% by 2027
· Colleague learning and
development - we continue to invest
significantly in opportunities for colleagues to learn and grow
with us. Having surpassed our previous learning target of providing
5 million hours of skills for life learning by 2025, we have
established a new target: "by 2030, more than 20,000 colleagues
will have completed an apprenticeship, traineeship or external
qualification". During the year, B&Q and Screwfix were both
listed in the Top 100 Apprenticeship Employers in the UK
· Hiring to support growth
ambitions - we continue to invest in
talent and capability to support our growth ambitions, recruiting
deep functional expertise in key areas such as trade, e-commerce,
marketplace, data, and technology, including the creation of two
in-house engineering centres, one in Cluj, Romania, and one at our
shared services centre in Krakow, Poland, as well as the creation
of a new retail media team in France. In the context of strong
competition for talent in our markets, our attrition levels, and
the time it takes to hire new colleagues remain either in line
with, or better than, retail industry benchmark levels
Planet: Helping to tackle
climate change and becoming Forest Positive
Scope 1 and 2 carbon
reduction targets
· Our
near-term 1.5°C-aligned science-based scope 1 and 2 carbon
reduction target is to reduce emissions from our own operations by
37.8% by FY 25/26, as approved by the Science Based Targets
initiative (SBTi) in 2021. We see this as the first step towards
achieving our net-zero target (for our own operations) by FY
40/41
· We
continue to exceed this near-term target, reducing the carbon
footprint from our own operations by 62.0% since FY 16/17 (FY
22/23: 51.0%)
· A key
driver for the sustained reductions in our operational emissions is
the decarbonisation of our logistics network, and switching to more
efficient vehicles across our delivery fleets (e.g., Screwfix
switching from diesel to hydrotreated vegetable oil, and Castorama
France switching from diesel to biomethane)
· We
have also significantly reduced emissions from our property
portfolio through the adoption of energy efficiency measures,
including investing in on-site renewable energy and replacing gas
and fossil fuel-based heating systems in our stores (e.g., the
installation of air source heat pumps at Screwfix
stores)
Scope 3 carbon reduction
targets
· Our
scope 3 science-based target requires us to achieve a 40% reduction
(per £'million turnover) from purchased goods and services and use
of sold products by 2025, against a FY 17/18 base year. Our efforts
are focused on raw materials used in the manufacturing of our
products, emissions from the manufacturing process, and emissions
from customer use of our products
· In FY
23/24, we reduced the intensity of our scope 3 emissions from the
supply chain and customer use of products by 41.6% since FY 17/18,
exceeding our 2025 target. This reduction in carbon emissions has
been driven through a change in our sales mix, the decarbonisation
of energy grids within our banner countries, and our continued work
on vendor and product decarbonisation
· Earlier in the year, we became a founding member of a new
collaborative taskforce, initiated by EDRA/GHIN (the global trade bodies for
home improvement retailers), to help the sector reduce its scope 3
emissions
Forest
Positive
· Kingfisher has a strong heritage in sustainable forestry and
the responsible sourcing of wood and paper. In FY 23/24, 97% of the
wood and paper used in our products was responsibly sourced (FY
22/23: 94%), including 100% of catalogue paper (FY 22/23:
100%)
· We
therefore remain on track to achieve our target of 100% by FY
25/26
· As a
founding member of the Forest
Allies initiative (in 2021), we have continued our
partnership with the Rainforest
Alliance, investing in six forest projects in key tropical
sourcing regions. These cover 190,000 hectares of community-managed
forests and contribute towards the protection of more than 2.5
million hectares of protected areas
· We
also continue to invest in local forest partnerships, including
B&Q and Screwfix extending their work with The Woodland Trust to restore, create
and protect native woodland and forests in the UK
Customers: Helping to make
greener, healthier homes affordable
· In FY
23/24, £6.4bn of sales, representing 49% of Group sales (FY 22/23:
47%), were from Sustainable Home Products (SHPs). This has more
than doubled since we established the programme in FY 11/12, and
our target is to reach 60% by FY 25/26
· Our
SHPs include our OEB as well as national and international branded
products. Through our OEB portfolio, we are able to drive progress
against our SHP target and embed environmental considerations
through all stages of our product development process
· For
example, we phased out peat-based compost at B&Q (Kingfisher's
biggest seller of compost by volume) and are now working to remove
peat from all our OEB bagged-compost across the Group. We have also
removed solvents from more paint lines - e.g., through the launch
of Naturéa, Kingfisher's
first bio-based paint
· An
important subset of our SHPs are our energy and water-saving
products. In FY 23/24, these represented 10% of Group sales (FY
22/23: 10%). We see considerable longer-term potential across all
our markets as the 'green homes' agenda accelerates, and as our
customers continue to look for opportunities to reduce the impact
of their homes on the environment
· We are
developing opportunities to further increase our engagement with
customers in this area. Examples include launching free
energy-saving diagnostic tools at B&Q and Brico Dépôt France,
and expanding our range of OEB energy-saving products to support
customers in improving energy efficiency at home and to save money
in the process
· During
the year we launched our Green
Star product marker programme at B&Q, Screwfix and
Castorama Poland for an initial 8.5k SKUs, with the aim of making
it easier for customers to identify and purchase products that have
a reduced impact on the environment. Green Star marked products are
selected from our SHP range, with a stand-out environmental feature
or benefit that can be easily explained to and understood by
customers. The claim is then verified by relevant external
third-parties. Our priority in FY 24/25 is to extend the
Green Star marker to a
broader population of SKUs, and continue the roll-out to all our
banners
Communities: Fighting to fix
bad housing
· We
surpassed our FY 25/26 target of reaching 2 million people whose
housing needs are greatest, through our charitable partnerships and
banner Foundations. We have reached a total of 3.2 million people
since FY 16/17 through our community projects
· Our
banner Foundations partner with national charities including
Shelter and Macmillan in the UK, Fondation Abbé Pierre in France, and
Habitat for Humanity in
Poland and Romania
· This
year, the Screwfix
Foundation celebrated its 10th
anniversary, raising over £10m since launch and with nearly 2,200
organisations receiving a donation
· The
Brico Dépôt Romania Foundation's 'Hope build' project (alongside
Habitat for Humanity)
received an award in the 2023 Romanian CSR Awards Gala, and
B&Q's 'Raise the Roof'
campaign was awarded 'Challenge Event of the Year' at the 2023
Business Charity Awards in the UK
· During
the year we supported global relief efforts across the world,
including providing financial donations in response to natural
disasters in Turkey, Syria, Libya and Morocco
Governance and
Reporting
Our
Responsible Business Committee (RBC) supports and oversees the
delivery of Kingfisher's Responsible Business strategy. This
includes monitoring performance against the Responsible Business
priorities. Our Group Climate Committee meets quarterly to monitor
the Company's approach to meeting its
climate commitments and assessing climate-related risks and
opportunities. For more information on
Responsible Business governance, please refer to our 2023/24 Annual
Report.
Responsible
Business measures are integrated into our long-term incentive plan
(known as the Kingfisher Performance Share Plan), which is granted
to members of our senior leadership team. The performance
conditions attached to the vesting of awards include a 25%
weighting on ESG measures. Kingfisher also has a £550m
sustainability-linked revolving credit facility, which enables us
to benefit from a lower interest rate when we deliver on ambitious
sustainability and community-based targets under the Group's
Responsible Business plan.
In June
2023, we published our 2022/23 Responsible Business Report,
detailing the progress we made across the four priorities of our
Responsible Business strategy. We
also published our inaugural Responsible Business
Databook which captures current and historical data, as well as
performance against our priorities. We
report on financial impacts of
climate-related risks and opportunities in line with the approach
set out by the Task Force on Climate-related Financial Disclosures
(TCFD). Our FY 23/24 Responsible Business Report will be published
in Q2 24/25.
We continue
to rank highly in external benchmarks and indices. Highlights
include MSCI ('AAA'
score), Sustainalytics
(second out of 42 in home improvement retail), FTSE4Good (score of 4.3 out of 5),
CDP Climate Change ('A-'
leadership score) and Workforce
Disclosure Initiative (88% score, compared to average
consumer discretionary score of 60%).
To deliver the best possible
service to our customers and ensure our colleagues are engaged,
fulfilled and able to realise their full potential, we are building
a culture based on trust, agility, inclusion and
curiosity. We have adopted a 'done is
better than perfect' mindset to move faster and with more agility,
given the rapidly changing environment in which we do business. And
we continue to focus on becoming leaner and more productive, as
well as lowering our same-store inventories.
Human
· We are
continuing to listen to our colleagues and measure their engagement
across the Group, through formal and informal mechanisms. These
include our 17 Affinity Networks and the Kingfisher Colleague
Forum
· Every
Kingfisher colleague was asked to share their feedback via a
colleague engagement survey in the summer of 2023. We heard from
87% of colleagues (up 4% YoY), with colleagues sharing 280,000
comments. Our Employee Net Promoter Score (eNPS) of 57 improved by
three points YoY. All banners completed at least two colleague
surveys last year, enabling better visibility and management of
engagement levels
· Good
progress is being made on delivering on our inclusion plans. During
the year we launched a Group-wide allyship campaign, called
'Together. Stronger'. The
campaign sets clear minimum standards and expectations on inclusive
behaviours and educates on the importance of everyday allyship.
Colleagues complete mandatory training on non-inclusive behaviours
and how to tackle them, and have been invited to make personal
commitments to being a better ally
· During
the year, Kingfisher's 'Diversity in Tech Network' was recognised
at the Women in Tech Employer Awards, winning the Best Employer Network category, and at the
European Diversity Awards
as Outstanding Network of the Year. Our LGBTQ+ Affinity Network was
also shortlisted in the Diva
Awards, the Bank of London Rainbow
Honours, and the European Diversity Awards in
recognition of its impact
Agile
· One of
the benefits of 'Powered by Kingfisher' is that our Group can
easily leverage learnings across the business to ensure our banners
can move with speed and agility. For example, our 'Centres of
Excellence' enable technologies, resources
and best practices to be quickly implemented elsewhere, such
as our marketplace or trade initiatives. Kingfisher has
'Centres of Excellence' in supply chain, trade,
compact stores, customer services, data, technology, and e-commerce
& marketplace
· Across
our technology infrastructure, we are leveraging strategic
partnerships (such as with Google, Amazon Web Services and
Microsoft Azure for cloud
data) to enable a seamless migration from traditional data centres
to a multi-cloud approach. This has led to enhanced speed,
performance and resilience of our technology systems
· During
the year we bolstered our internal engineering capabilities, adding
software engineers in our Krakow (Poland) centre and opening our
first engineering centre in Cluj (Romania), allowing us to be more
agile in responding to customer demands
Lean - cost reduction and
productivity
Multi-year structural cost
reduction programme
We continue
to make strong progress in lowering our cost base across multiple
areas of the business.
The net
savings from these programmes continue to partially offset the
costs of inflation, expansion and space changes, and the investment
requirements of our business over the medium term. They are also
key to unlocking targeted profitability improvements in France. In
FY 23/24, we made progress in several areas:
· Supply and
logistics - Kingfisher's supply and
logistics teams continue to optimise our distribution centre and
logistics networks. In France, Castorama and Brico Dépôt have reduced distribution
centre space by 28% over the last four years in line with changes
to their supply routes to market for near-sourced
products
· GNFR*
optimisation - category managers
with Group-wide responsibilities and local procurement teams
continue to optimise c.£2.5bn of GNFR spend through around 230 cost
reduction projects. During the year, B&Q changed its customer
service call centre provider and adopted call centre automation in
certain instances to lower costs. The Group also realised lower IT
hosting costs through our strategic partnership with Google, and lower SAP support costs
through switching third-party support providers. Brico Dépôt France
realised cost savings from decommissioning legacy IT operating
systems
· Overheads
- savings were realised across Group and banner
head offices, including through the expanded use of our shared
service centre (SSC) in Krakow, Poland. During FY 23/24, our SSC
expanded its software engineering and data capabilities,
facilitating a lower level of reliance on third-party
contractors
· Property
- excluding Screwfix, the Group completed 17 lease
renewals and renegotiations in FY 23/24, with an average net rent
reduction of 19%
alongside improved lease terms. In addition, our rightsized big-box
stores continue to deliver positive results. We have completed nine
rightsizings over the last three years, including seven at B&Q
and two at Castorama France. These completed rightsizings saw an
average space reduction of c.30%, which in general was taken over
by grocery retailers, thereby bringing incremental footfall to the
vicinity of the stores. Since reopening, the stores have exceeded
our performance expectations, with sales density improvements of up
to 50%, improved profitability, and reductions in energy
consumption of over 50%. Our plan is to rightsize up to 20 more
B&Q stores over the medium to longer term, and accelerate
rightsizings at Castorama France. Please refer to 'France performance and profitability
plan' in Section 3 for further details
Productivity
In addition
to our more structural cost reduction programmes, we are also
focused on raising productivity levels - i.e., adapting and
improving existing processes and workflows to deliver greater cost
efficiency. Examples include:
· Store
productivity - during the year we
deployed various initiatives across our banners to reduce stock
shrinkage, including strengthening entrance/exit security, product
tagging and the secure storage of high-value items
· Labour
productivity - we are continuously
optimising store operating models through the improvement of
operating procedures and greater use of technology. Across all our
banners we are redesigning processes and enhancing systems to
improve the time taken to complete tasks such as picking,
collection, and replenishment. This includes time and motion
optimisation of C&C and home delivery order preparation. We
have implemented formal store staffing templates to reduce
management time spent on managing staffing needs. Additionally, we
are leveraging improved benchmarking and forecasting to support
more flexible workforce planning
· Self-checkout
terminals - we have seen increased
customer adoption of self-checkout terminals across B&Q,
Castorama France and Castorama Poland. This has enabled colleagues
to be redeployed to other areas of our stores, including picking
for e-commerce orders. Self-checkout terminals are currently being
piloted in Brico Dépôt France and Iberia
· Supply and
logistics - at Screwfix, significant
productivity improvements are being realised through new automated
processes at our flagship logistics site in Trentham. Over 25% of
weekly volumes in Trentham is now processed using automated
technology, resulting in a 150% pick-rate improvement compared to
standard processes, and thereby generating meaningful cost savings.
At Castorama Poland, we improved truck utilisation by 16% through
using equipment that enabled us to better load trucks, saving on
transport costs and removing the equivalent of 3,500 road
journeys
· Overheads
- Our SSC in Krakow, Poland, continues to focus on
reducing costs through greater use of automation - for example,
using bots to analyse and chase overdue accounts
receivables
Lean -
inventories
Structurally reducing our inventory levels and improving
inventory turn is a major priority over the medium term. To unlock
efficiencies in our supply chain and inventory management, all our
banners are deploying actions to structurally reduce same-store
inventory. We are doing this by leveraging data to improve our
planning and forecasting, optimising our replenishment systems
(e.g., re-adjusting for shorter supplier lead-times), and
developing stronger ranging principles.
For
example, as described in 'Build a
data-led customer experience', earlier this year Kingfisher
developed a supply chain visibility tool (SVT) to provide our
banners with real-time and end-to-end visibility of products, from
receipt at origin ports all the way to arriving at stores. This
transparency over the supply chain is enabling our banners to
reduce inventory levels and replenishment cycles by optimising the
time between products being ordered and arriving at stores and
distribution centres. Over time, we believe this will result in
higher product availability, lower inventory days, less working
capital requirements and higher profitability.
More
recently we have implemented a tactical action plan on product
supply and availability in light of the current crisis in the Red
Sea. We are working with our freight providers to secure shipping
container capacity. We have successfully shipped our OEB outdoor
stock according to our original plan and, to date, these shipments
represent c.75% of our full 'buy' for the season. We have also
protected ongoing supply through pulling forward product orders
where appropriate, and quickly reflecting more accurate shipping
lead-times in replenishment systems.
FY 23/24 performance
summary
· Net inventory
- total net inventory decreased by 4% (£132m) to
£2,914m (FY 22/23: £3,046m in constant currency; £3,070m in
reported rates). This was driven by lower purchasing, a reduction
in seasonal and 'buffer' stock, product mix and strategic reduction
initiatives; partially offset by product cost inflation and new
stores
· Same-store
inventory - as of 31 January 2024,
same-store net inventory* was 5% (£160m) lower YoY in constant
currency
· Inventory in units
(volume) - as of 31 January 2024,
inventory in units (volume) was down 4% YoY
· Net inventory
days - increased by 1%
YoY
· Product
availability - overall and 'best
seller' product availability significantly improved YoY, both up
over 2% to above 96%
Medium-term financial and
capital allocation priorities
Medium-term financial
priorities
Building on
our industry's attractive growth prospects, and supported by the
application of Kingfisher's strategic priorities, the
Group's medium-term financial and capital
allocation priorities are as
follows:
· Sales to grow ahead of our
markets:
- LFL
sales growth driven by our strategic focus areas including
e-commerce and marketplace sales growth, OEB sales growth and
higher trade customer penetration; and
- Sales
impact of c.+1.5% to +2.5% from annual net space growth over the
medium term, primarily driven by Screwfix and Castorama
Poland
· Adjusted pre-tax profit to
grow faster than sales:
- Supported by scale benefits, higher
margin initiatives, operating cost leverage, and multi-year
operating cost reduction opportunities
· Strong cash generation to
drive growth investment and shareholder returns:
- Free
cash flow of c.£450m in FY 25/26, followed by >£500m per annum from FY 26/27,
supported by profit growth and ongoing
inventory self-help measures
Capital allocation
priorities
The Group's
objectives in managing capital are to:
· Invest
in the business where economic returns are attractive
· Maintain a solid investment grade credit rating
· Safeguard the Group's ability to continue as a going concern
and retain financial flexibility
· Provide attractive returns to shareholders
We allocate
capital, subject to strict returns criteria, to organic and
'bolt-on' inorganic growth opportunities that accelerate our
strategy. Our target gross capital expenditure is c.3% of total
sales per annum, focused on delivering against attractive organic
growth opportunities.
To maintain
a solid investment grade credit rating, our maximum net debt to
EBITDA is 2.0 times over the medium term. To retain financial
flexibility, we aim to maintain strong liquidity headroom
(including cash, cash equivalents and committed debt facilities),
which is currently set at a minimum of £800m. Total liquidity as of
31 January 2024 includes an undrawn revolving credit facility of
£550m and cash of £353m (net of bank overdrafts).
Our target
ordinary dividend cover range is 2.25 to 2.75 times, based on
adjusted basic earnings per share. We may move outside of this
target range, temporarily, from time to time. Overall, our aim is
to grow the ordinary dividend progressively over time. If surplus
capital remains after having achieved all the above objectives, the
Board will return surplus capital to shareholders via a share
buyback programme or special dividends.
Dividend for FY
23/24
The Board
has proposed a final dividend per share of 8.60p. This results in a
proposed total dividend per share of 12.40p in respect of FY 23/24,
which is in line with the prior year (FY 22/23: 12.40p) and equates
to a dividend cover of 1.8 times.
The final
dividend is subject to shareholder approval at the Annual General
Meeting on 20 June 2024,
and if
approved will be paid on 25 June 2024 to shareholders on the
register at close of business on 17 May 2024. The shares will go
ex-dividend on 16 May 2024.
Share buyback
programme
In line
with our capital allocation policy described above, in September
2023 the Board determined that a further £300m of surplus capital
was available to return to shareholders, via a share
buyback
programme.
As of 31 January 2024, we had repurchased c.£50m worth of shares
under this programme and expect the second tranche of the programme
to begin soon.
Including
shares bought back under the previous £300m programme, we
repurchased c.£160m worth of shares in FY 23/24.
Section 5: Technical guidance
for FY 24/25
Please refer to Section 8 for
further details regarding forward-looking
statements.
Income
statement
· Space
- Sales
impact of c.+1.5%
from net space growth, mainly from Screwfix UK & Ireland and
Castorama Poland
· New
businesses
- 'Other'(1) retail losses of c.£30m (FY 23/24: £30m)
· Depreciation and amortisation
- Anticipate c.£680m (FY 23/24: £641m)
· Central costs
- Anticipate c.£65m (FY 23/24: £60m)
· Share
of JV interest and tax
- Anticipate c.£20m (FY 23/24: £16m)
· Net
finance costs
- Anticipate c.£115m (FY 23/24: £105m)
· Adjusted PBT
- Full
year adjusted PBT of c.£490m to £550m(2)
· Tax
rate
- Group
adjusted effective tax rate* of c.27% (FY 23/24: 27%)
Cash flow
· Capital expenditure
- Targeting gross capex of c.£360m (FY 23/24: £363m; c.2.8% of total
sales)
· Free
cash flow
- Anticipate c.£350m to £410m for the
year (FY 23/24: £514m)
· Share
buybacks
- Continuation of current £300m share buyback programme (c.£50m
completed to date)
· Dividends
- Dividend policy target cover range of 2.25 to 2.75 times,
based on adjusted basic earnings per share. We may move outside of
this target range, temporarily, from time to time
(1) 'Other' consists of the
consolidated results of Screwfix International, NeedHelp, and
results from franchise and wholesale agreements, recorded within
the 'Other International' division.
(2) Guidance assumes current
exchange rates.
Section 6: Financial
review
A summary
of the reported financial results for the 12 months ended 31
January 2024 is set out below. To be read in conjunction with the
condensed financial statements included in part 2 of this
announcement.
|
Financial
summary
|
|
|
% Total
Change
|
% Total
Change
|
% LFL
Change
|
|
|
2023/24
|
2022/23
|
Reported
|
Constant
currency
|
Constant
currency
|
|
Sales
|
£12,980m
|
£13,059m
|
(0.6)%
|
(1.8)%
|
(3.1)%
|
|
Gross
profit
|
£4,776m
|
£4,795m
|
(0.4)%
|
(1.6)%
|
|
|
Gross
margin %
|
36.8%
|
36.7%
|
10bps
|
10bps
|
|
|
Operating
profit
|
£580m
|
£723m
|
(20.0)%
|
|
|
|
Statutory
pre-tax profit (PBT)
|
£475m
|
£611m
|
(22.3)%
|
|
|
|
Statutory
post-tax profit
|
£345m
|
£471m
|
(26.7)%
|
|
|
|
Statutory
basic EPS
|
18.2p
|
23.8p
|
(23.5)%
|
|
|
|
Net
increase/(decrease) in cash(1)
|
£84m
|
£(555)m
|
n/a
|
|
|
|
Total
dividend
|
12.40p
|
12.40p
|
-
|
|
|
|
|
|
|
|
|
|
|
Adjusted
metrics
|
|
|
|
|
|
|
Retail
profit
|
£749m
|
£923m
|
(18.9)%
|
(19.5)%
|
|
|
Retail
profit margin %
|
5.8%
|
7.1%
|
(130)bps
|
(130)bps
|
|
|
Adjusted
pre-tax profit (PBT)
|
£568m
|
£758m
|
(25.1)%
|
|
|
|
Adjusted
pre-tax profit margin %*
|
4.4%
|
5.8%
|
(140)bps
|
|
|
|
Adjusted
post-tax profit
|
£415m
|
£589m
|
(29.2)%
|
|
|
|
Adjusted
basic EPS
|
21.9p
|
29.7p
|
(26.4)%
|
|
|
|
Free cash
flow
|
£514m
|
£(40)m
|
n/a
|
|
|
|
Net
debt(2)
|
£(2,116)m
|
£(2,274)m
|
n/a
|
|
|
|
(1) Net increase/(decrease) in
cash and cash equivalents and bank overdrafts.
(2) Net debt includes £2,367m of
lease liabilities under IFRS 16 in FY 23/24 (FY 22/23:
£2,444m).
Total
sales decreased by 1.8% on
a constant currency basis, to £12,980m, reflecting a resilient
performance in core categories, particularly in the UK &
Ireland, and the adverse impact of weaker 'big-ticket' sales in the
latter part of the year and unseasonal weather on seasonal category
sales. By geography, a positive sales performance in the UK &
Ireland was offset by lower sales in France, where the trading
environment was impacted by low consumer confidence, particularly
in the second half of the year. Sales were also lower in Poland,
Iberia and Romania, where we faced tough comparatives and a weak
consumer environment. On a reported basis, which includes the
impact of exchange rates, total sales decreased by 0.6%.
LFL sales
of -3.1% excludes a +1.3% sales impact from a net
increase in space, driven by Screwfix store openings in the UK
& Ireland and Castorama in Poland, and the acquisition of
assets of Connect Distribution Services Limited (renamed Screwfix
Spares). During the year, we opened 76 new stores (including 49
stores in the UK, five in Ireland, 17 in France including 15
Screwfix stores, and five in Poland). We closed one Screwfix store
and eight grocery concession stores in the UK, and one Brico Dépôt
store in Romania.
Gross margin
%
increased by 10 basis points on a constant currency and reported
basis, reflecting effective management of inflation and supplier
negotiations, partially offset by higher
customer participation in promotional activity in France and
Poland. In H2, gross margin % increased on
a constant currency basis by 60 basis points. Group gross profit decreased by 1.6% in
constant currency.
In constant
currency, retail profit
decreased by 19.5%,
largely reflecting lower gross profits in
France and Poland, and higher operating
costs in the UK & Ireland and Poland. On a reported basis,
retail profit decreased by 18.9%. Operating costs increased by 2.7% on a
constant currency basis, largely reflecting cost inflation,
including YoY increases in pay rates and energy costs, as expected,
as well as higher technology spend, higher costs associated with
space growth and new store openings, and charges related to
ineffective foreign exchange hedges in H1. The increase in
operating costs was partially offset through flexing our staffing
levels and variable costs, and structural savings achieved by our
cost reduction programme. In H2, our banners in France and Poland
strengthened their actions on cost management, resulting in
operating costs being limited to an increase of 1.3% YoY. The
Group's retail profit margin
% decreased by 130 basis points on a constant currency basis
to 5.8% (FY 22/23: 7.1%, at reported rates). In H2, retail profit
margin % decreased on a constant currency basis by 70 basis points
to 5.2%.
Adjusted pre-tax
profit decreased by 25.1% to £568m
(FY 22/23: £758m), reflecting lower retail profit, higher central
costs (including the impact of insurance claim deductibles in the
UK & Ireland and Poland) and higher share of JV interest and
tax (reflecting accounting under high inflation and related higher
interest rates in our joint venture Koçtaş), partially offset by lower net finance costs. Adjusted pre-tax profit margin %
decreased by 140 basis points to 4.4% (FY 22/23: 5.8%).
Statutory pre-tax
profit decreased by 22.3% to £475m
(FY 22/23: £611m). This reflects lower operating profit, including
the impacts of impairments (see adjusting items below).
A
reconciliation from the adjusted basis to the statutory basis for
pre-tax profit is set out below:
|
|
2023/24
£m
|
2022/23
£m
|
Increase/
(decrease)
|
|
Retail profit (constant
currency)
|
749
|
930
|
(19.5)%
|
|
Impact of
exchange rates
|
-
|
(7)
|
n/a
|
|
Retail profit
(reported)
|
749
|
923
|
(18.9)%
|
|
Central
costs
|
(60)
|
(49)
|
(22.9)%
|
|
Share of
interest and tax of joint ventures & associates
|
(16)
|
(4)
|
n/a
|
|
Net finance
costs
|
(105)
|
(112)
|
+6.1%
|
|
Adjusted pre-tax
profit
|
568
|
758
|
(25.1)%
|
|
Adjusting
items before tax
|
(93)
|
(147)
|
n/a
|
|
Statutory pre-tax
profit
|
475
|
611
|
(22.3)%
|
Net finance
costs of £105m (FY 22/23: £112m)
consist principally of interest on IFRS 16 lease liabilities. The
YoY decrease was largely due to higher interest income on cash
deposits.
Adjusting items after
tax were a total charge of £70m (FY
22/23: charge of £118m), as detailed below:
|
|
2023/24
£m
Gain/(charge)
|
2022/23
£m
Gain/(charge)
|
|
Net store
asset impairment charges
|
(76)
|
(139)
|
|
Operating
model restructuring
|
(11)
|
-
|
|
Release of
France and other restructuring provisions
|
-
|
3
|
|
NeedHelp
goodwill impairment
|
(8)
|
-
|
|
Romania
goodwill impairment
|
-
|
(16)
|
|
Release of
Castorama Russia disposal warranty liability
|
-
|
4
|
|
Profit on
disposal of Crealfi associate investment
|
2
|
-
|
|
Profit on
exit of properties
|
-
|
1
|
|
Adjusting items before
tax
|
(93)
|
(147)
|
|
Prior year
and other adjusting tax items
|
23
|
29
|
|
Adjusting items after
tax
|
(70)
|
(118)
|
In
consideration of our FY 23/24 performance, we have revised future
projections for a number of stores across the Group's portfolio.
This has resulted in the recognition of £76m of net store
impairment charges in the year. Impairment charges of £104m have
been recorded principally in France, Romania and the UK, partially
offset by impairment reversals of £28m principally in the UK.
During the year, the Group commenced formal consultations with
employee representatives regarding a proposed restructuring of the
Group technology operating model. Charges of £11m have been
recorded, primarily related to this programme. The total cost of
the programme is expected to reach c.£15m by FY 24/25.
An impairment charge of £8m has been recorded
relating to the goodwill originally recorded on the acquisition of
NeedHelp in FY 20/21, principally driven by revised financial
projections. On 30 June 2023, the Group
completed the disposal of its 49% interest in its French associate
investment Crealfi S.A., resulting in a gain on disposal of
£2m.
Prior year
and other adjusting tax items relate principally to deferred tax
credits recorded in respect of the impairment and restructuring
expenses noted above, movements in prior year provisions to reflect
a reassessment of expected outcomes, agreed
positions with tax authorities and items that have
time-expired. Please refer to note 6 of the
condensed financial statements.
Taxation
The Group's
adjusted effective tax rate (ETR) is
sensitive to the blend of tax rates and profits in the Group's
various jurisdictions. It is higher than the UK statutory rate
because of the amount of Group profit that is earned in higher tax
jurisdictions. The adjusted ETR, calculated on profit before
adjusting items, prior year tax adjustments and the impact of
future rate changes, is 27% (FY 22/23: 22%). The adjusted ETR is
higher than the prior year rate primarily due to the increase in
the UK statutory tax rate which took effect on 1 April 2023. Other
factors include the impact of a lower share of Group profit from
Poland (statutory tax rate of 19%), and increased losses in
territories in which tax credits are not recognised.
The
statutory effective tax rate includes the impact of adjusting items
(including prior year tax items). The impact of these result in a
statutory effective tax rate of 27%.
|
|
Pre-tax
profit
£m
|
Tax
£m
|
2023/24
%
|
Pre-tax
profit
£m
|
Tax
£m
|
2022/23
%
|
|
Adjusted effective tax
rate
|
568
|
(153)
|
27%
|
758
|
(169)
|
22%
|
|
Adjusting
items
|
(93)
|
23
|
|
(147)
|
29
|
|
|
Statutory effective tax
rate
|
475
|
(130)
|
27%
|
611
|
(140)
|
23%
|
In FY
21/22, Kingfisher paid £64m (including interest) to HM Revenue
& Customs in relation to the European Commission's 2019 state
aid decision concerning the UK's controlled foreign company tax
rules. The General Court of the European Union dismissed several of
the appeals in June 2022 and the decision is now pending with the
European Court of Justice. The Group continues to recognise the
amounts paid, together with a further £4m of accrued repayment
interest, as a non-current tax asset, based on its assessment that
its appeal will ultimately be successful. Please refer to note 12
of the condensed financial statements.
The
statutory tax rates applicable to this financial year and the
expected statutory tax rates for next year in our main
jurisdictions are as follows:
|
|
Statutory
tax rate
2024/25
|
Statutory
tax rate
2023/24
|
|
UK
|
25%
|
24%
|
|
France
|
26%
|
26%
|
|
Poland
|
19%
|
19%
|
Adjusted basic earnings per
share decreased by 26.4% to
21.9p (FY 22/23: 29.7p), which excludes the impact of adjusting items. Basic earnings per share decreased by
23.5% to 18.2p (FY 22/23:
23.8p).
|
|
Earnings(1)
£m
|
2023/24
EPS
pence
|
Earnings(1)
£m
|
2022/23
EPS
pence
|
|
Adjusted basic earnings per
share
|
415
|
21.9
|
589
|
29.7
|
|
Adjusting
items before tax
|
(93)
|
(4.9)
|
(147)
|
(7.4)
|
|
Prior year
and other adjusting tax items
|
23
|
1.2
|
29
|
1.5
|
|
Basic earnings per
share
|
345
|
18.2
|
471
|
23.8
|
(1) Earnings figures presented
reconcile adjusted post-tax profits to statutory post-tax
profits.
Dividends
The Board
has proposed a final dividend per share of 8.60p (FY 22/23 final
dividend: 8.60p). Taken alongside the interim dividend already paid
of 3.80p, this results in a proposed total dividend per share of
12.40p in respect of FY 23/24 (FY 22/23: 12.40p). The final
dividend is subject to shareholder approval at the Annual General
Meeting on 20 June 2024, and if approved will be paid on 25 June
2024 to shareholders on the register at close of business on 17 May
2024. The shares will go ex-dividend on 16 May 2024. A dividend
reinvestment plan (DRIP) is available to shareholders who would
prefer to invest their dividends in the Company's shares. The last
date for receipt of DRIP elections is 4 June 2024.
Management of balance sheet
and liquidity risk and financing
Management
of cash and debt facilities
Kingfisher
regularly reviews the level of cash and debt facilities required to
fund its activities. This involves preparing a prudent cash flow
forecast for the medium term, determining the level of debt
facilities required to fund the business, planning for repayment or
refinancing of debt, and identifying an appropriate amount of
headroom to provide a reserve against unexpected outflows and/or
impacts to cash inflows. To retain financial flexibility, we aim to
maintain strong liquidity headroom (including cash and cash
equivalents, and committed debt facilities), which is currently set
at a minimum of £800m.
Net debt to
EBITDA
As of 31
January 2024, the Group had £2,116m (FY 22/23: £2,274m) of net debt
on its balance sheet including £2,367m (FY 22/23: £2,444m) of total
lease liabilities.
The ratio
of the Group's net debt to EBITDA was 1.6 times as of 31 January
2024 (1.6 times as of 31 January
2023). At this level, the Group has
financial flexibility whilst retaining an efficient cost of
capital. The Group's maximum net debt to
EBITDA is 2.0 times over the medium term. Please refer to
'Medium-term financial and
capital allocation priorities' in Section 4 for further
details.
Net debt to
EBITDA is set out below:
|
|
2023/24
£m
|
2022/23
£m
|
|
Retail
profit
|
749
|
923
|
|
Central
costs
|
(60)
|
(49)
|
|
Depreciation and amortisation
|
641
|
582
|
|
EBITDA
|
1,330
|
1,456
|
|
Net debt
|
2,116
|
2,274
|
|
Net debt to
EBITDA
|
1.6
|
1.6
|
Credit
ratings
Kingfisher
holds a BBB credit rating with Fitch, (P) Baa2 rating with Moody's,
and a BBB rating with Standard and Poor's. The Outlook is Stable
across all three agencies.
Revolving
credit facility
The Group
has a £550m Revolving Credit Facility (RCF)
agreement in place with a group of its relationship banks, linked
to sustainability and community-based targets, of which c.£50m
expires in May 2025 and c.£500m expires in May 2026. As of 31
January 2024, this RCF was undrawn.
Term
loans
In FY
22/23, the Group entered into two fixed term loans: £50m maturing
in December 2024 and £50m maturing in January 2025, with the latter
linked to the Group's sustainability and community-based targets.
In FY 23/24, the two term loans were extended to June 2025 and
January 2026 respectively.
Covenants
The terms
of the committed RCF and both term loans require that the ratio of
Group operating profit (excluding adjusting items) to net interest
payable (excluding interest on IFRS 16 lease liabilities) must be
no less than 3:1 for the preceding 12 months as at the half and
full year-ends. As of 31 January 2024, Kingfisher was compliant
with this requirement.
Total
liquidity
As of 31
January 2024, the Group had access to over £900m in total
liquidity, including cash and cash equivalents of £353m (net of
bank overdrafts) and access to a
£550m RCF.
Free cash
flow
A
reconciliation of free cash flow is set out below:
|
|
2023/24
£m
|
2022/23
£m
|
|
Operating
profit
|
580
|
723
|
|
Adjusting
items
|
93
|
147
|
|
Operating profit (before
adjusting items)
|
673
|
870
|
|
Other
non-cash items(1)
|
673
|
612
|
|
Change in
working capital
|
118
|
(469)
|
|
Pensions
and provisions
|
(5)
|
(20)
|
|
Net rent
paid
|
(474)
|
(454)
|
|
Operating cash
flow
|
985
|
539
|
|
Net
interest received/(paid)
|
9
|
-
|
|
Tax
paid
|
(117)
|
(130)
|
|
Gross
capital expenditure
|
(363)
|
(449)
|
|
Free cash
flow
|
514
|
(40)
|
|
Ordinary
dividends paid
|
(237)
|
(246)
|
|
Share
buybacks
|
(160)
|
(337)
|
|
Share
purchase for employee incentive schemes
|
(24)
|
(9)
|
|
Disposal of
Castorama Russia
|
-
|
8
|
|
French tax
authority payment
|
-
|
(34)
|
|
Disposal of
Crealfi S.A. and acquisition of assets of Connect Distribution
Services Limited
|
6
|
-
|
|
Disposal of
assets and other(2)
|
(15)
|
4
|
|
Net cash
flow*
|
84
|
(654)
|
|
Opening net
debt
|
(2,274)
|
(1,572)
|
|
Movements
in lease liabilities
|
71
|
(41)
|
|
Other
movement including foreign exchange
|
3
|
(7)
|
|
Closing net
debt
|
(2,116)
|
(2,274)
|
(1) Includes depreciation and
amortisation, share-based compensation charge and pension operating
cost.
(2) Includes adjusting cash flow
items (principally comprising restructuring costs), partially
offset by proceeds from the issue of new shares, dividends from
joint ventures and associates, and disposal of assets.
Operating
profit (before adjusting items) was £197m lower than last year,
reflecting lower retail profit, higher central costs and higher
share of JV interest and tax. The working capital inflow of
£118m was primarily
driven by a decrease in net inventory of £132m, reflecting lower
purchasing, a reduction in seasonal and 'buffer' stock, product mix
and strategic reduction initiatives; partially offset by product
cost inflation and new stores. Due to more normalised purchasing
patterns compared to prior years, the movement in payables was
broadly stable, decreasing by £8m. Receivables increased by
£6m.
Gross
capital expenditure was £363m, decreasing by 19% (FY 22/23: £449m).
Of this expenditure, 35% was invested in refreshing, maintaining
and adapting existing stores (including renewable energy
initiatives), 18% on new stores, 34% on technology and digital
development, 7% on range reviews and 6% on other areas including
supply chain investment.
Overall,
free cash flow for the year was £514m (FY 22/23: £(40)m). Net debt
as of 31 January 2024 (including IFRS 16 lease liabilities) was
£2,116m (FY 22/23: £2,274m).
A
reconciliation of free cash flow and net cash flow to the statutory
net movement in cash and cash equivalents and bank overdrafts is
set out below:
|
|
2023/24
£m
|
2022/23
£m
|
|
Free cash
flow
|
514
|
(40)
|
|
Ordinary
dividends paid
|
(237)
|
(246)
|
|
Share
buybacks
|
(160)
|
(337)
|
|
Share
purchase for employee incentive schemes
|
(24)
|
(9)
|
|
Disposal of
Castorama Russia
|
-
|
8
|
|
French tax
authority payment
|
-
|
(34)
|
|
Disposal of
Crealfi S.A. and acquisition of assets of Connect Distribution
Services Limited
|
6
|
-
|
|
Disposal of
assets and other(1)
|
(15)
|
4
|
|
Net cash
flow
|
84
|
(654)
|
|
Issue of
fixed term debt
|
-
|
99
|
|
Net increase/(decrease) in
cash and cash equivalents
and bank overdrafts
|
84
|
(555)
|
(1) Includes adjusting cash flow
items (principally comprising restructuring costs), partially
offset by proceeds from the issue of new shares, dividends from
joint ventures and associates, and disposal of assets.
Return on capital employed
(ROCE*)
In FY
23/24, Kingfisher's post-tax ROCE was 7.8% (FY 22/23: 10.9%). The
decrease was driven by lower profits in all geographic divisions.
Kingfisher's weighted average cost of capital (WACC) was 8.8% (FY
22/23: 9.3%). ROCE by geographic division is analysed
below:
|
|
Sales
£bn
|
Proportion
of Group sales
|
Capital
employed (CE) £bn
|
Proportion
of Group CE
|
ROCE
2023/24
|
ROCE
2022/23
|
|
UK &
Ireland
|
6.4
|
49.2%
|
2.9
|
45.4%
|
14.5%
|
16.3%
|
|
France
|
4.2
|
32.7%
|
1.7
|
27.0%
|
5.9%
|
8.4%
|
|
Other
International
|
2.4
|
18.1%
|
1.4
|
22.3%
|
3.9%
|
9.1%
|
|
Central
|
|
|
0.4
|
5.3%
|
|
|
|
Total
|
13.0
|
|
6.4
|
|
7.8%
|
10.9%
|
Property
Kingfisher
owns a significant property portfolio, the majority of which is
used for trading purposes. A formal valuation of the portfolio was
undertaken by external professional valuers in October 2023. Based
on this exercise, on a sale and leaseback basis with Kingfisher in
occupancy, the value of the property portfolio was £2.7bn (FY
22/23: £2.8bn). This is compared to a net book value of £2.2bn (FY
22/23: £2.2bn) recorded in the financial statements (including
investment property and property included within assets held for
sale). Balance sheet values were frozen as of 1 February 2004, on
transition to IFRS.
|
|
2023/24
£bn
|
2023/24
Yields
|
2022/23
£bn
|
2022/23
Yields
|
|
France
|
1.3
|
8.6%
|
1.4
|
8.1%
|
|
UK
|
0.5
|
7.5%
|
0.5
|
7.2%
|
|
Poland
|
0.7
|
8.3%
|
0.7
|
8.0%
|
|
Other
|
0.2
|
n/a
|
0.2
|
n/a
|
|
Total
|
2.7
|
|
2.8
|
|
Pensions
As of 31
January 2024, the Group had a net surplus of £99m (FY 22/23: £137m
net surplus) in relation to defined benefit pension arrangements,
of which a £212m surplus (FY 22/23: £251m surplus) was in relation
to the UK scheme. The net surplus has reduced primarily due to the
UK scheme, where asset losses were greater than the reduction in
the accounting liability; the latter arising mainly from a higher
discount rate (net of inflation). As part of the funding valuation
exercise completed in the prior year, the Trustee and Kingfisher
agreed to cease annual employer contributions from August 2022 to
July 2025. The accounting valuation is sensitive to a number of
assumptions and market rates which are likely to fluctuate in the
future. Please refer to note 9 of the condensed financial
statements.
Alternative Performance
Measures (APMs)
In the
reporting of financial information, the Directors have adopted
various Alternative Performance Measures (APMs), also known as
non-GAAP measures, of historical or future financial performance,
position or cash flows other than those defined or specified under
International Financial Reporting Standards (IFRS). These measures
are not defined by IFRS and therefore may not be directly
comparable with other companies' APMs, including those used by
other retailers. APMs should be considered in addition to, and are
not intended to be a substitute for, or superior to, IFRS
measurements.
|
APM
|
Closest equivalent IFRS
measure
|
Reconciling items to IFRS
measure
|
Definition and
purpose
|
|
Adjusted
basic earnings per share (EPS)
|
Basic
earnings per share
|
A
reconciliation of adjusted basic earnings per share is included in
the Financial Review (Section 6) and
note 7 of the
condensed financial statements
|
Adjusted
basic earnings per share represents profit after tax attributable
to the owners of the parent, before the impact of adjusting items
(see definition below), divided by the weighted average number of
shares in issue during the period. The exclusion of adjusting items
helps provide an indication of the Group's ongoing business
performance.
|
|
Adjusted
effective tax rate
|
Effective
tax rate
|
A
reconciliation to the statutory effective tax rate is set out in
the Financial Review (Section 6)
|
The
adjusted effective tax rate is calculated as continuing income tax
expense excluding tax adjustments in respect of prior years
(including the impact of changes in tax rates on deferred tax),
significant one-off tax settlements and provision charges/releases
and the tax effects of adjusting items, divided by continuing
profit before taxation excluding adjusting items. Prior year tax
items represent income statement tax relating to underlying items
originally arising in prior years, including the impact of changes
in tax rates on deferred tax. The exclusion of items relating to
prior years, and those not in the ordinary course of business,
helps provide an indication of the Group's ongoing rate of
tax.
|
|
Adjusted
pre-tax profit (PBT)
|
Profit
before taxation
|
A
reconciliation of adjusted PBT is set out in the
Financial Review (Section 6)
|
Adjusted
PBT is used to report the performance of the business at a Group
level. This is stated before adjusting items. The exclusion of
adjusting items helps provide an indication of the Group's ongoing
business performance.
|
|
Adjusted
pre-tax profit (PBT) margin %
|
No direct
equivalent
|
Refer to
definition
|
Adjusted
PBT is used to report the performance of the business at a Group
level and is separately defined. Adjusted PBT margin % represents
adjusted PBT as a percentage of sales. It is a measure of overall
business profitability.
|
|
Adjusted
post-tax profit
|
Profit
after tax
|
A
reconciliation of adjusted post-tax profit is set out in the
Financial Review (Section 6) and note 7 of
the condensed financial statements
|
Adjusted
post-tax profit is used to report the after-tax performance of the
business at a Group level. This is stated before adjusting items.
The exclusion of adjusting items helps provide an indication of the
Group's ongoing after-tax business performance.
|
|
Adjusting
items
|
No direct
equivalent
|
Not
applicable
|
Adjusting
items, which are presented separately within their relevant income
statement category, include items which by virtue of their size
and/or nature, do not reflect the Group's ongoing trading
performance. Adjusting items may include, but are not limited to:
non-trading items included in operating profit such as profits and
losses on the disposal, closure, exit or impairment of
subsidiaries, joint ventures, associates and investments which do
not form part of the Group's ongoing trading activities; the costs
of significant restructuring and incremental acquisition
integration costs; profits and losses on the exit of properties,
impairments of goodwill and significant impairments (or impairment
reversals) of other non-current assets; prior year tax items
(including the impact of changes in tax rates on deferred tax),
significant one-off tax settlements and provision charges/releases
and the tax effects of other adjusting items; financing fair value
remeasurements i.e., changes in the fair value of financing
derivatives, excluding interest accruals, offset by fair value
adjustments to the carrying amount of borrowings and other hedged
items under fair value (or non-designated) hedge relationships.
Financing derivatives are those that relate to hedged items of a
financing nature.
|
|
Central
costs
|
No direct
equivalent
|
Not
applicable
|
Central
costs principally comprise the costs of the Group's head office
before adjusting items. This helps provide an indication of the
Group's ongoing head office costs.
|
|
Constant
currency
|
No direct
equivalent
|
Not
applicable
|
Constant
currency changes in total sales, LFL sales, gross profit, gross
margin %, retail profit, retail profit margin % and operating costs
reflect the year-on-year movements after translating the prior year
comparatives at the current year's average exchange rates. These
are presented to eliminate the effects of exchange rate
fluctuations on the reported results.
|
|
Core and
'big-ticket' category sales±
|
No direct
equivalent
|
Not
applicable
|
Core and
'big-ticket' category sales include the sales from non-seasonal
products across all our categories, including 'big ticket' sales
(i.e., kitchen, bathroom & storage). It is used as a measure of
our non-seasonal related performance, which is the majority of
Group sales.
|
|
Dividend
cover
|
No direct
equivalent
|
Not
applicable
|
Dividend
cover represents the ratio of earnings to dividends. It is
calculated as adjusted basic earnings per share divided by the
total (full year) dividend per share. It is used as an indication
of how sustainable dividend payments are.
|
|
E-commerce
sales penetration %
|
No direct
equivalent
|
Refer to
definition
|
E-commerce
sales penetration % represent total e-commerce sales as a
percentage of sales. For the purpose of this calculation only,
sales are adjusted to replace marketplace net sales with
marketplace gross sales. It is used to track the success of our
e-commerce strategy.
|
|
First-party
e-commerce sales
|
No direct
equivalent
|
Refer to
definition
|
First-party
e-commerce sales are total first-party sales (excluding VAT)
derived from online transactions, including click & collect
(C&C). This includes sales transacted on any device, however
not sales through a call centre. Sales (and related
commissions/fees) from products supplied by third-party e-commerce
marketplace vendors are excluded. It is used to measure the
performance of our first-party e-commerce business across the
Group.
|
|
Total
e-commerce sales
|
No direct
equivalent
|
Refer to
definition
|
Total
e-commerce sales are first-party e-commerce sales plus marketplace
gross sales. References to digital or e-commerce sales growth
relates to growth in constant currency. It is used to measure the
performance of all e-commerce business (first-party and
third-party) across the Group.
|
|
EBITDA
|
Profit
before taxation
|
A
reconciliation of EBITDA is set out in the Financial Review (Section 6)
|
EBITDA
(earnings before interest, tax, depreciation and amortisation) is
calculated as retail profit less central costs and before
depreciation and amortisation. This measure is widely used in
calculating the ratio of net debt to EBITDA, and is used to reflect
the Group's leverage.
|
|
Free cash
flow
|
Net
increase in cash and cash equivalents and bank
overdrafts
|
A
reconciliation of free cash flow is set out in the
Financial Review (Section 6)
|
Free cash
flow represents the cash generated from operations (excluding
adjusting items) less the amount spent on interest, tax and capital
expenditure during the year (excluding asset disposals). This
provides a measure of how much cash the business generates that can
be used for expansion, capital returns and other
purposes.
|
|
Gross
margin %
|
No direct
equivalent
|
Refer to
definition
|
Gross
profit represents sales from the supply of home improvement
products and services (excluding VAT), less the associated cost of
those sales. Gross margin % represents gross profit as a percentage
of sales. It is a measure of operating performance.
|
|
LFL
|
Sales
|
Refer to
definition
|
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. It is a measure to reflect the Group's performance
on a comparable basis.
|
|
Marketplace
gross merchandise value (GMV)
|
No direct
equivalent
|
Refer to
definition
|
Marketplace
GMV is the total transaction value (including VAT) from the sale of
products supplied by third-party e-commerce marketplace vendors. It
is used to measure the performance of our e-commerce marketplace,
and is the basis on which our commissions from third-party vendors
are determined.
|
|
Marketplace
gross sales
|
No direct
equivalent
|
Refer to
definition
|
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. It is used to measure
the performance of our e-commerce marketplace.
|
|
Marketplace
net sales
|
No direct
equivalent
|
Refer to
definition
|
Marketplace
net sales are commissions (excluding VAT) earned on e-commerce
marketplace transactions, together with other service fees. This is
included within sales. Commissions are determined based on GMV. It
is used to measure the performance of our e-commerce
marketplace.
|
|
Marketplace
participation %
|
No direct
equivalent
|
Refer to
definition
|
Marketplace
participation % represents marketplace gross sales as a percentage
of total e-commerce sales. It is used to track the success of our
marketplace strategy and performance.
|
|
Net
debt
|
No direct
equivalent
|
A
reconciliation of this measure is provided in note 11 of the
condensed financial statements
|
Net debt
comprises lease liabilities, borrowings and financing derivatives
(excluding accrued interest), less cash and cash equivalents and
short-term deposits, including such balances classified as held for
sale.
|
|
Net cash
flow
|
Net
increase in cash and cash equivalents and bank
overdrafts
|
A
reconciliation of net cash flow is set out in the Financial Review (Section 6) and in note
11 of the condensed
financial statements
|
Net cash
flow is a measure to reflect the total movement in the net debt
balance during the year excluding the movement in lease
liabilities, exchange differences and other non-cash
movements.
|
|
Operating
costs
|
No direct
equivalent
|
Not
applicable
|
Operating
costs represent gross profit less retail profit. This is the
Group's operating cost measure used to report the performance of
our retail businesses.
|
|
Own
exclusive brands (OEB) sales
|
No direct
equivalent
|
Refer to
definition
|
OEB refers
to our portfolio of own exclusive brands across seven core
categories - surfaces & décor, tools & hardware, bathroom
& storage, kitchen, EPHC (electricals, plumbing, heating &
cooling), building & joinery, and outdoor.
OEB sales
are sales of own exclusive brand products. It is used to measure
the performance of OEB across the Group.
|
|
Retail
profit
|
Profit
before taxation
|
A
reconciliation of Group retail profit to profit before taxation is
set out in the Financial Review (Section 6)
and note 3 of the
condensed financial statements. There is no statutory equivalent to
retail profit at a retail banner level
|
Retail
profit is stated before central costs, adjusting items and the
Group's share of interest and tax of JVs and associates. This is
the Group's operating profit measure used to report the performance
of our retail businesses.
|
|
Retail
profit margin %
|
No direct
equivalent
|
Refer to
definition
|
Retail
profit is the Group's operating profit measure used to report the
performance of our retail businesses and is separately defined
above. Retail profit margin % represents retail profit as a
percentage of sales. It is a measure of operating
performance.
|
|
ROCE
|
No direct
equivalent
|
Refer to
definition
|
ROCE
(return on capital employed) is the post-tax retail profit less
central costs, excluding adjusting items, divided by capital
employed excluding historic goodwill, net debt and adjusting
restructuring provision. The measure provides an indication of the
ongoing returns from the capital invested in the business. Capital
employed is calculated as a two-point average. The calculation
excludes disposed businesses.
|
|
Same-store
net inventory
|
Inventory
|
Refer to
definition
|
Same-store
net inventory movement represents the constant currency,
year-on-year change in net inventory before the impact of store
openings and closures. It is a measure to reflect the Group's
inventory management on a comparable basis.
|
|
Seasonal
category sales±
|
No direct
equivalent
|
Refer to
definition
|
Seasonal
category sales include the sales from certain products within our
outdoor, electricals, plumbing, heating & cooling (EPHC) and
surfaces & décor categories. It is used as a measure of the
performance of our sales that are subject to the season we are in,
or prevailing weather conditions.
|
± Indicates the inclusion of new
APMs during FY 23/24. The new APMs in the table above have been
introduced to track the performance of our core and 'big-ticket'
and seasonal category sales.
Other
Definitions
Banque de
France data for DIY retail sales
(non-seasonally adjusted). Includes relocated and extended
stores. https://webstat.banque-france.fr/fr/#/node/5384398.
As of and including January 2023, we took the decision to suspend
the communication of Castorama France and Brico Dépôt France
monthly sales figures to Banque
de France and the internal index of FMB (Fédération des Magasins de Bricolage -
our trade association). In November 2023, we restarted the
communication of monthly sales figures to both associations,
including the retrospective resubmission of September and October
2023 sales data.
'Do It Yourself'
(DIY) sales include products that
facilitate self-undertaken home improvement projects and tasks,
including paint, lighting, tools and hardware, and garden
maintenance.
'Do It For Me'
(DIFM) sales include products and
services used in home improvement projects and tasks that
predominantly require a tradesperson to undertake, including
kitchens, bathrooms, tiling, wardrobes, windows and doors, certain
electrical and plumbing activities, and installation
services.
France
consists of Castorama France and Brico Dépôt
France.
GNFR
(Goods Not For Resale) covers the procurement of
all goods and services a retailer consumes (including ocean
freight, energy, media buying, cleaning, and security).
Iberia
consists of Brico Dépôt Spain and Brico Dépôt
Portugal.
Other
International consists of Poland,
Iberia, Romania, 'Other', and Turkey (Koçtaş JV). 'Other' consists
of the consolidated results of Screwfix International, NeedHelp,
and results from franchise and wholesale agreements.
SKU
(Stock Keeping Unit) is defined as the number of
individual variants of products sold or remaining in stock. It is a
distinct type of item for sale, such as a product and all
attributes associated with the item type that distinguish it from
others. These attributes could include, but are not limited to,
manufacturer, description, material, size, colour, packaging and
warranty terms.
UK &
Ireland consists of B&Q in the
UK & Ireland and Screwfix in the UK & Ireland.
Section 8: 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 the financial results for the 12 months ended 31
January 2024. 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
amended) (or, otherwise under any other law, regulation or exchange
rules in any other applicable jurisdiction).
Certain information contained in
this announcement may constitute "forward-looking statements"
(including within the meaning of the safe harbour provisions of the
United States Private Securities Litigation Reform Act of 1995),
which can be identified by the use of terms such as "may", "will",
"would", "could", "should", "expect", "anticipate", "project",
"estimate", "intend", "continue", "target", "plan", "goal", "aim",
forecast, or "believe" (or the negatives thereof) or other
variations thereon or comparable terminology. These forward-looking
statements are based on currently available information and our
current assumptions, expectations and projections about future
events. These forward-looking statements include all matters that
are not historical facts and include statements which look forward
in time 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
repurchases and dividends, capital expenditure and capital
allocation, liquidity, prospects, growth and strategies, litigation
or other proceedings to which we are subject, acts of war or
terrorism worldwide, work stoppages, slowdowns or strikes, public
health crises, outbreaks of contagious disease, environmental
disruption or political volatility. By their nature,
forward-looking statements are not guarantees of future performance
and are subject to future events, risks and uncertainties - many of
which are beyond our control, dependent on actions of
third-parties, or currently 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 section of the Company's Annual
Report (as published). No representation, warranty or other
assurance is made as to the achievement or reasonableness of, and
no reliance should be placed on, such forward-looking
statements.
The forward-looking statements
contained in this announcement speak only as of the date of this
announcement and the Company does not undertake any obligation to
update or revise any forward-looking statement to reflect any new
information, change in circumstances, or change in the Company's
expectations to reflect events or circumstances after the date of
this announcement or to reflect the occurrence of unanticipated
events.