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Kingfisher: Annual Group LFL Sales Increase By 7.1%

B&Q store Farnborough

Kingfisher has published final results for the year ended 31 January 2021.

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Highlights

  • Supporting colleagues, customers and communities– swift and robust action taken throughout the COVID crisis
  • New strategy delivering– empowered banners supported by Group scale, strength & expertise
  • Strong financial performance– driven by new strategy, agility in management in response to the COVID crisis, and strong demand for home improvement
  • Supportive market drivers and new trends– offering longer-term growth opportunities
  • Emerging from the COVID crisis stronger–improved competitive position in all key markets and strong new customer growth and digital adoption, with c.10 million new online customers
  • Resuming dividends– progressive, sustainable dividend policy established (target dividend cover* of 2.25-2.75x)

FY 20/21 Group results

  • Sales up 6.8% in constant currency, driven by strong trading from Q2 and reduced disruption

  • LFL sales up 7.1% with growth across all banners in the UK & Ireland*, France*, Poland, Romania and Portugal
    -  LFL sales up 15.5% in Q4 20/21 with growth across all retail banners and categories
  • E-commerce sales*up 158%; now 18% of total Group sales (FY 19/20: 8%)
    -  Click & collect sales up 226%; 78% of Group e-commerce sales (FY 19/20: 62%)
  • Retail profit up 27.4% in constant currency, largely driven by B&Q performance

  • Adjusted pre-tax profit up 44.4%, including c.£85 million of non-recurring net cost savings* in FY 20/21 

  • Statutory pre-tax profit up 634%, reflecting higher operating profit and significantly lower exceptional adjusting items*

  • Free cash flow of £938 million, up £747 million, reflecting higher operating profit, working capital inflow of £376 million and lower capex

  • Net debt to EBITDA* of 0.9x as at year-end (31 January 2020: 2.0x)

  • Dividend payments resumed with a proposed total dividend per share of 8.25p for FY 20/21

Making good progress against ‘Powered by Kingfisher’ strategic objectives

  • Announced new strategic plan in June 2020 - ‘Powered by Kingfisher’ - distinct retail banners addressing diverse customer needs, ‘powered’ by the Group

  • New strategy and leadership teams firmly established in the business

  • Progressing fix of issues from previous years, including: rebalancing Group and local activities, improving operational performance in France, implementing new trading approaches, and pausing or stopping some initiatives to focus our resources

  • Making good progress with core strategic priorities, including:
    - Clear positioning and growth plans for all retail banners
    - Fundamental reorganisation of Kingfisher’s commercial operating model to enable a more balanced and agile local-Group operating model (refer to Section 2)
    - Acceleration of e-commerce growth initiatives
    - Successful roll-out of more own exclusive brands (OEB) including new kitchens and indoor lighting ranges
    - Introduction of several new mobile-led and service capabilities, including the acquisition of the services marketplace NeedHelp
    - Test and launch of new compact stores and partnership models
    - Progressing ESG priorities – strong actions to engage, develop and support colleagues, help tackle climate change and deforestation, support our communities and promote greener, healthier homes
    - Multiple actions to control costs, inventory and working capital during the COVID crisis; clear longer-term plan to further reduce costs and same-store inventory 

Clear financial priorities

  • Prioritise top line growth and grow sales ahead of market
  • Aim to grow adjusted pre-tax profit in line with sales(3); gradually faster than sales over time
  • Generate strong free cash flow to underpin shareholder returns 

Thierry Garnier, Chief Executive Officer, said: 

“The dedication and commitment of our 80,000 colleagues has enabled us to make substantial strategic, operational and financial progress this year. Kingfisher is coming out of the COVID crisis as a stronger business, with an improved competitive position in all key markets, strong new customer growth and a step change in digital adoption. I would like to express my personal thanks to all our teams for their incredible efforts in the most testing of circumstances. 

“We rolled out our ‘Powered by Kingfisher’ strategy without delay and even accelerated in many areas. Our distinct retail banners are now empowered and much more agile, which enabled them to react quickly in what was a volatile situation last year, supported by the scale, strength and expertise of the Kingfisher Group. 

“We continued to ‘focus and fix’ key aspects of the business. We have now finalised the fundamental reorganisation of our commercial operating model, and introduced new trading approaches tailored to local markets. In France, our performance and competitive position have significantly improved as we’ve addressed operational issues and strengthened our teams and ranges. There is still work to do, but our progress and the overall engagement of our teams are clear to see. 

“We are making significant progress with our longer-term strategic goals. In the area of e-commerce, by rapidly implementing changes in our stores, IT systems and supply chain, we have met the demand of our customers for speed and convenience. This approach, supported by our model of placing stores at the centre, has driven rapid click & collect growth along with faster home delivery services. Group e-commerce sales grew by 158%, reaching 18% of our sales. We have also accelerated the pace of development in the areas of mobile, services, store concepts and partnerships, and have many ongoing and exciting innovations in progress. 

“Throughout this year, we have remained committed to making the right decisions for our colleagues, customers, and our communities. This has included upgrading our safe operating standards, ring-fencing and donating PPE, supporting our colleagues and rewarding frontline staff, returning government support, and developing our plans to help tackle climate change and deforestation.  

“Current trading remains positive and, while visibility is limited for the year as a whole, we are confident of continued outperformance of our wider markets. The COVID crisis has established new longer-term trends that are clearly supportive for our industry – including more working from home, the renewed importance of the home as a ‘hub’, and the development of a new generation of DIY’ers – and we expect these to endure. With our strategic progress, we are well positioned to capitalise on these new and positive market trends.” 

Outlook for FY 21/22

  • The following guidance applies in the event of no adverse change in COVID-related confinement measures (e.g. new lockdown restrictions resulting in further store closures)

  • Good start to the new financial year, with strong demand in the UK and France
    - Q1 21/22 Group LFL sales(4) up 24.2% (to 18 March 2021) 
    - Mindful of continued uncertainty related to COVID in continental Europe
  • H1 21/22– expect low double-digit LFL sales growth, supported by delivery of strategic objectives

  • H2 21/22– planning for LFL scenarios of -15% to -5% (2-year LFLs* for H2 of -1% to +11%)
    - H2 likely to be impacted by strong year on year comparables (H2 20/21: Group LFL sales +16.6%) and uncertainty over the macroeconomic and consumer environment
  • Aiming to grow full year adjusted pre-tax profit (before c.£85 million of non-recurring net cost savings in FY 20/21) in line with sales(3)

  • Strategic execution and supportive market trends provide opportunity for sustained
    long-term growth

Learn more about B&Q and Screwfix's UK & Ireland performance here.

Source : Kingfisher PLC

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22 March 2021

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