skip to main content
Find Insight DIY on
* * *

International DIY News

Castorama half-year like-for-like sales decline by 5.8%

Castorama 725 x 500

Kingfisher has reported on half year results for the 6 months ended 31 July 2018 (Year 3 of its 5 year transformation).

/live/news/wysiwyg/KGF HY2018.JPG

FRANCE

Kingfisher France sales decreased by 2.1% (-2.4% LFL) to £2,267 million reflecting continuing weaker performance of Castorama partly offset by an improving sales performance at Brico Dépôt. According to Banque de France* data, sales for the home improvement market were flat and continue to be volatile from month to month.

Castorama total sales declined by 6.0% (-5.8% LFL) to £1,202 million reflecting weaker footfall and the impact of transformation-related activity. LFL sales of weather-related categories were down 6.9% while sales of non-weather-related categories, including showroom, were down 5.6%.

Brico Dépôt total sales grew by 2.7% (+1.7% LFL) to £1,065 million reflecting a good performance of the new unified ranges and supported by investment in marketing. Across the two businesses space remained broadly flat. Retail profit decreased by 31.1% to £122 million. This reflected weaker sales, a decrease in gross margin and higher costs, including phasing of marketing investment at Brico Dépôt. Gross margin declined by 60 basis points reflecting a weak performance at Castorama France, including logistics & stock inefficiencies.

In March 2017 we outlined the key areas of focus to address our underperformance in France, namely pricing, proposition and digital. Whilst we have made progress against each of these there is still more work ahead to improve the overall performance. At Castorama, price positioning continues to improve as we invest in unified offer but remains slightly higher than the market. The unified offer has been well received in categories such as bathroom and storage, and has started to re-energise Brico Dépôt’s sales supported by marketing investment. There is however scope to improve implementation of the new ranges and to communicate with customers more effectively.

The new Castorama website was launched at the end of January 2018 and is starting to show some encouraging conversion results. However, the digital customer experience needs further development and overall digital sales penetration remains low. The rollout of our unified IT platform continues at pace with Castorama nearing completion and the store rollout about to commence in Brico Dépôt. We remain convinced that the ONE Kingfisher plan is tackling the root causes of our underperformance in France and will deliver a sustainably improved performance. In addition, we have put actions in place to support H2 performance. These include accelerating the move towards EDLP* pricing, improving price architecture on new ranges, more effective customer communication, reduction of logistics & stock inefficiencies and reduction in variable costs.

OTHER INTERNATIONAL

Other International total sales increased by 4.5% (+0.5 % LFL) to £1,178 million reflecting growth in Poland and the acquisition of Praktiker Romania in November 2017. Retail profit decreased by 19.0% to £64 million, with growth in Poland offset by losses in Russia, Romania and Screwfix Germany.

Poland
Sales in Poland were up 2.8% (+1.5 % LFL) to £726 million despite the introduction of new laws on Sunday trading. LFL sales of weather-related categories were up 1.6% while sales of non-weatherrelated categories, including showroom, were up 1.4%. Gross margin was up by 120 basis points reflecting improved product mix including unified and unique ranges. Retail profit grew by 1.9% to £88 million after higher staff costs. In Iberia* sales decreased by 2.7% (-2.7% LFL) to £184 million, delivering a £1 million retail profit (2017/18: £4 million reported retail profit).

Russia
In Russia sales declined by 4.6% (-1.6% LFL) to £167 million. The business delivered a retail loss of £9 million (2017/18: £3 million reported retail loss) reflecting a challenging environment and store pre-opening and refurbishment costs.

Romania
In Romania sales increased by 82.3% (+3.5% LFL) to £95m driven by the acquisition of Praktiker Romania and made a retail loss of £9 million (2017/18: £1 million reported retail loss) reflecting customer uncertainty following the change of ownership of Praktiker Romania.

Germany
Screwfix Germany sales increased by 19.2% (+19.6% LFL) and made an £8 million retail loss (2017/18: £9 million reported retail loss).

Koçtaş
Turkey, Kingfisher’s 50% JV, Koçtaş, contributed retail profit of £1 million (2017/18: £3 million reported retail profit).

Kingfisher's half-year results presentation can be found here

Information on Kingfisher's UK & Ireland performance can be found here.

Véronique Laury, Chief Executive Officer, said:

“The extent and pace of change in the retail sector is profound. We saw these changes and acted early. We’re now halfway through our ONE Kingfisher transformation and we are well on our way to becoming a truly customer led, digital, and efficient business.

“Transformation on this scale is tough, and there are challenges that we’re working through. There is still much to do to improve our performance in France and to remove inefficiencies within the business as we continue to transform at pace. I am confident that we have the right plan and the opportunity for Kingfisher is significant.

“Our H1 results reflect a solid performance in the UK and Poland whilst France remains difficult. Looking to the full year we remain on track to deliver our strategic milestones for the third year in a row and have put actions in place to support our performance. The outlook for our main markets continues to be mixed.

“We firmly believe in the transformation plan benefits and maintain our ambition. The environment is making our task more difficult than expected and we will always take the right decisions for the company in the long-term.”

To view the publications in full, follow the links below:

Kingfisher half year results publication - part one

Kingfisher half year results publication - part two 

Source : Insight DIY Team and Kingfisher

For all the very latest news and intelligence on the UK's largest home and garden retailers, sign up for the Insight DIY newsletter today. 

19 September 2018

Related News

view more International DIY News
*

Insight DIY always publishes the latest news stories before anyone else and we find it to be an invaluable source of customer and market information.

*
Max Crosby Browne - CEO, Home Decor
Newsletters

Don't miss out on all the latest, breaking news from the DIY industry