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Kingfisher full year 2017-2018 final results

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On Wednesday Kingfisher released their final results for their financial year ending 31st January 2018. Total Kingfisher sales increased to £11,655m, up 3.8% on the same period last year and retail profit increased 0.3% to £849m (£847m last year).

Kingfisher UK & Ireland

Kingfisher UK & Ireland sales were up 0.4% (+0.6% LFL) to £5,003 million reflecting the continued strong Screwfix performance and modest price inflation, offset by the impact of B&Q store closures last year and transformation business disruption. During Q4 however, the businesses experienced softer sales patterns (B&Q -5.1% LFL; Screwfix +7.1% LFL) reflecting softer demand for big ticket categories (e.g. kitchens). Gross margins were down 30 basis points and focus on cost control continued. Retail profit grew by 5.0% to £375 million.

Kingfisher France

Kingfisher France sales decreased by 3.0% (-3.5% LFL) to £4,387 million reflecting continuing weaker performance versus the market and the impact of transformation business disruption. According to Banque de France data*, sales for the home improvement market were up 0.7% however were volatile across the year.

Kingfisher Other International

Other International total sales increased by 3.5% (+2.0% LFL) to £2,265 million. Retail profit increased by 3.9% to £154 million driven by Poland. During the year, in Poland one new store was opened and one was relocated, and in Russia one store was closed. In November 2017 Kingfisher acquired 26 Praktiker Romania stores.

Kingfisher One Update

FY 17/18: 5 year transformation continues at pace, with the company delivering the following key strategic milestones for the second year in a row.

  • Unified & unique offer:unified ow at 23% of product (based on cost of goods sold).
  • Sales out-performing non-unified ranges, gross margins up 180 basis points (pre-clearance).
  • Digital: now over 50% of Group sales operating on new unified IT platform.
  • Group digital sales* now at 6% (up from 4% last year).
  • Operational efficiency: delivered £28m of benefits from Goods Not for Resale*(GNFR) programme (£58m to date), further efficiencies starting to be unlocked.

FY group results reflect

  • Continued good growth at Screwfix and Poland and self-help initiatives, including GNFR benefits, offset by:
  • c.1.5% LFL impact from business disruption, continued weaker and volatile sales in France and softer Q4 sales in the UK reflecting weaker demand for big ticket items.

Delivered step up in level of transformation activity.

Acting on root causes of business disruption, adapting their approach as we progress.

Balance sheet remains strong

  • Returned £491m of cash to shareholders, £231m via ordinary dividend; £260m via share buyback.
  • Lower net cash reflects higher levels of stock driven by changes to their operating model and to improve product availability.

Outlook for 2018/19 and beyond

  • FY 18/19 another big year of implementation, aware of challenges ahead.
  • Unified & unique offer: unify 40% of product (cost of goods sold) and deliver sales growth; Group gross margin to grow (post clearance).
  • Digital: complete final year of unified IT roll-out
  • Operational efficiency: deliver £30m of benefits (GNFR and other efficiencies).
  • Remain confident in ability to deliver FY 20/21 transformation plan benefits 

Download the full trading release here.

Véronique Laury, Chief Executive Officer, said:

“We have made good progress in this second year of our ambitious five-year transformation after a significant step up in the level of activity. For the second year in a row, all our key strategic milestones have been met and I am really pleased to say that we are starting to see tangible delivery of our plan. The changes are now visible across our stores and online. Over a third of our ranges have now been unified and they are being well received by customers. We are buying as ONE and are starting to see the customer and financial benefits coming through, both in sales and gross margins. Our digital initiatives are gaining momentum as we enter the final year of roll out of our unified IT platform. I am also pleased to see that our operational efficiency initiatives, focusing initially on goods not for resale, continue to deliver and are now gathering pace as we start to unlock further opportunities.

“Our performance this year has been mixed, however, with solid growth at Screwfix and Poland, offset by continued weaker sales in France and some business disruption, principally reflecting product availability and clearance. We are acting on the causes of this disruption, however next year will be another big year in our transformation plan. The pace of change is quick and impactful but necessary as we build the new ONE Kingfisher engine to support our ambition to be the leading home improvement company, based on putting customer needs first. The outlook for our main markets is also mixed. The UK is more uncertain, France is encouraging yet volatile, whilst the market in Poland remains supportive.

“Given our good progress so far, and supported by our highly engaged teams, I remain confident in our ability to deliver our plan and in the customer and financial benefits it will generate.” 

Check out the Kingfisher Final Results infographic here.

Source: Insight DIY Team & Kingfisher Press Release

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21 March 2018

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