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Kingfisher: International Performance

Castorama Bordeaux Merignac 725 x 500.jpg

Kingfisher International

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Kingfisher France sales decreased by 7.0% (LFL -5.9%) to £2,028 million, reflecting the significant impact from COVID-related store closures in Q1 (following a longer period of lockdown measures in France, relative to the UK). Q1 LFL was -41.5%, and this was partly offset by a strong recovery in demand in Q2 (LFL +27.0%). According to Banque de France data, sales for the home improvement market were 5.3% lower during the half. Following store reopenings, Kingfisher France’s LFL sales outperformed the market by 3.0% in June, and by 5.7% in July.

Gross margin % decreased by 130 basis points, largely reflecting higher supply & logistics costs (including storage costs arising from strike action at French ports, and the impact during the French lockdown period from closed ports and warehouses), the decision to upweight special promotions (or ‘arrivages’) sales in Brico Dépôt, and more trading events at both banners.

Retail profit decreased 44.1% to £63 million largely reflecting the decline in gross profit, partly offset by a decrease in operating costs of 4.9%. Operating costs declined largely due to cost saving initiatives and staff cost savings arising from the French government’s ‘activité partielle’ relief measures, partly offset by higher COVID-related costs and higher staff bonuses to frontline colleagues in France. Costs also included a shift of employee profit share into H1, with an offsetting c.£22m benefit in H2.

Castorama total sales decreased by 8.7% (LFL -7.4%) to £1,055 million. LFL sales of weatherrelated categories were up 0.5% while sales of non-weather-related categories, including showroom, were down 9.6%. Further commentary on many of the operational improvements at Castorama France are detailed in Section 1. Castorama’s total e-commerce sales grew by 202% in H1, representing 6% of total sales during the period (H1 19/20: 2% of total sales).

Brico Dépôt total sales decreased by 5.1% (LFL -4.3%) to £973 million. The weighting of ‘arrivages’ increased during the half as the business re-established its discounter credentials. Total e-commerce sales grew by 219% in H1, representing 7% of total sales during the period (H1 19/20: 2% of total sales). Across the two businesses, space has declined by c.2% since 31 January 2020, with Castorama closing four stores in H1 20/21 in line with the previously announced store closure programme.

Other International

/live/news/wysiwyg/22-09-2020 Kingfisher Other.JPGOther International total sales decreased by 1.2% (LFL -2.7%) to £1,140 million, with growth in Poland and Romania offset by declines in Iberia and Russia. Retail profit decreased by 3.2% to £59 million, reflecting a modest decline in Poland partly offset by lower combined retail losses in Romania and Russia.

Sales in Poland increased by 6.8% (LFL +3.5%) to £783 million, with stores remaining open throughout the half, and a strong recovery in demand in Q2 following COVID-related footfall declines in Q1. One new store was opened during the period. LFL sales of weather-related categories were up 11.8% while sales of non-weather-related categories, including showroom, were up 2.0%. Gross margin % was down 120 basis points largely reflecting mix, better price positioning, and more trading events. Retail profit decreased by 7.0% to £74 million with gross profit growth offset by an increase in operating costs of 7.6%. Operating costs increased largely due to wage inflation, the increase in space year on year, incremental COVID-related costs and higher staff bonuses to frontline colleagues. Poland’s e-commerce sales grew by 230% representing 5% of total sales (H1 19/20: 2% of total sales).

In Iberia, sales decreased by 22.3% (LFL -22.3%) to £138 million, largely due to COVID-related store closures in Spain, with retail profit decreasing by 56.2% to £1 million. Romania sales increased by 11.7% (+9.2% LFL) to £107 million with stores remaining open throughout the half. The business made a retail loss of £11 million (H1 19/20: £12 million reported retail loss).

In Russia sales decreased by 21.7% (LFL -17.5%) to £112 million, due to the impact of COVIDrelated disruption. The business made a retail loss of £5 million (H1 19/20: £7 million reported retail loss). The Russian business continues to be classified as ‘held for sale’ in the Group’s balance sheet. In Screwfix Germany, all 19 stores were closed during the first half of the previous year. In Turkey, Kingfisher’s 50% JV, Koçtaş, broke even at a retail profit level despite being significantly impacted by COVID-related store closures (H1 19/20: £3 million reported retail profit).

View the UK and Ireland results here.

Source : Kingfisher PLC

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22 September 2020

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