TIDMKGF
RNS Number : 2333G
Kingfisher PLC
16 March 2020
Kingfisher plc
COVID-19 update
Kingfisher plc ('Company' or 'Kingfisher') is providing an
update today on the impact of the COVID-19 pandemic on its
business, along with the measures it is taking to actively manage
the risks to its customers, colleagues and operations.
Thierry Garnier, CEO of Kingfisher said:
"We are committed to supporting local authorities and
governments to limit the spread of the virus, and the health and
safety of our colleagues and customers remains our top priority.
Our teams are also evaluating the best ways to satisfy emergency
needs in our markets, particularly for electricity, heating and
plumbing.
"While significant uncertainty exists around the impact of
COVID-19, we are taking immediate and significant measures to
contain our costs and protect our financial position. We have a
strong balance sheet, with significant liquidity headroom and
limited financial debt."
Risk management
Following the outbreak in Asia, the Company formed a central
committee to monitor and manage risks. It also established
committees in all its retail businesses. These committees continue
to monitor closely the impact on all areas of our business, as well
as ensuring publicly available advice is followed and that
appropriate safeguards are quickly implemented. From the start of
the outbreak, the Company has taken measures to protect its
colleagues and customers, to limit the impact on profitability and
to preserve financial flexibility.
Colleagues and customers
We are committed to supporting local authorities and governments
to limit the spread of the virus, and the health and safety of our
colleagues and customers remains our top priority.
We have implemented a series of actions to protect the health
and safety of our employees, including restricting travel and
meetings, the adoption of flexible working arrangements for
colleagues, and the recommendation to colleagues and customers to
follow specific health protection protocols. Contingency plans have
been drawn up to ensure continuity of customer service in stores
and in head offices, including encouraging work from home where
appropriate.
Supply chain and availability
The Company has global sourcing offices in China, other Asian
countries and Europe. Approximately 25% of our total annual cost of
goods sold (COGS) are directly sourced from the Far East. We also
source from Eastern and Western Europe, including Italy (c.4% of
COGS), as part of our supply chain.
In China, over 95% of our vendors' factories have reopened, with
capacity starting to rebuild. In addition, approximately two thirds
of our outdoor and seasonal product orders were shipped before
Chinese New Year. At this moment over 85% of placed orders have a
less than 4-week delay against their original schedule. In Italy,
while nearly all of our vendor factories remain open to date,
uncertainty remains over how goods can be transported from the
region.
Our Group Offer and Sourcing team is working with our retail
business' supply chain teams to prioritise their sourcing
requirements. While we recognise there will be delays to the supply
of goods, the risk to product availability is currently considered
to be manageable. Our net inventory at the end of February was
GBP2.6bn and stock availability across our core markets remains
high.
Sales and demand
Up to Saturday 14 March we have experienced no impact on demand
from COVID-19. In February 2020, Group LFL sales were +7.6%, or
+2.3% excluding the leap year impact. In the first two weeks of
this month (up to and including Saturday 14 March) Group LFL sales
continued to be positive, with growth across all businesses within
our core markets, strongly supported by e-commerce sales.
However, there is significant uncertainty on sales and demand as
the outbreak spreads, and as central governments and businesses
take action to contain and delay its impact.
Following the announcement by the French government on Saturday
14 March to close all non-essential places used by the public,
effective from midnight on Sunday 15 March, all 221 of Kingfisher's
Castorama and Brico Dépôt stores in France have closed until and
including Tuesday 14 April.
In addition, all 28 stores in Spain have also closed until and
including Sunday 29 March, following the government's declaration
of a 2-week state of emergency.
We are working to mitigate the implications of these closures,
including via alternative routes to continue serving customers
(e.g. via click & collect or home delivery).
Kingfisher's remaining 1,100+ stores across the United Kingdom,
Ireland, Poland, Romania, Portugal and Russia remain open.
Financial planning
Given recent government actions and the heightened impact and
uncertainty of changes in the magnitude, duration and geographic
reach of COVID-19, we are not yet able to predict the impact of
COVID-19 on our 2020/21 full year results.
The Company has modelled the impact of various downside
scenarios on the business. We are managing the business to protect
profitability and are taking immediate and significant actions to
reduce costs and optimise our cash flow and liquidity. These
include reducing operating expenditures, reducing stock and goods
not for resale (GNFR) purchases, taking actions to optimise working
capital, stopping all but essential capital expenditure, and making
use of tax payment and other government relief measures.
The Company has significant financial headroom. As at 31 January
2020, Kingfisher has cash and cash equivalents of GBP195m (as at 13
March 2020: GBP250m). In addition, the Company has access to two
undrawn Revolving Credit Facilities (RCF) totalling GBP775m
provided by major banks. The Company can draw down on these
facilities for renewable periods of one, two, three, four, five or
six months or any other agreed period to the expiry date of the
agreement; March 2022 (GBP225m RCF) and August 2022 (GBP550m RCF).
The Company confirms that for the year ended 31 January 2020, it
had significant headroom in relation to its interest cover covenant
and that it complied with key terms on its RCF.
In total, the Company has GBP1,025m in total liquidity
immediately available.
The Company has limited financial debt, totalling GBP136m as at
31 January 2020. Total net debt for the company, including
GBP2,563m of lease liabilities under IFRS 16, was GBP2,526m as at
31 January 2020, with a net debt to EBITDA ratio of 2.0 times (at
the lower end of the Company's target ratio of 2.0 to 2.5
times).
Further updates will be given as soon as we have greater
visibility on external developments and the impact on our
trading.
The Company plans to deliver its 2019/20 full year results as
scheduled on 24 March 2020, with a live webcast-based results
presentation for analysts and investors at 09.00 (UK time). This is
subject, however, to the potential for further COVID-19-related
decisions of the governments of the states in which we operate
between the 16 and 23 March 2020.
Contacts
Tel: Email:
Investor Relations +44 (0) 20 7644 1082 investorenquiries@kingfisher.com
Media Relations +44 (0) 20 7644 1030 corpcomms@kingfisher.com
Teneo +44 (0) 20 7420 3184 Kfteam@teneo.com
About Kingfisher plc
Kingfisher plc is a home improvement company with over 1,350
stores in nine countries across Europe. We employ 77,000 people and
nearly six million customers shop in our stores and through our
websites and apps every week.
Our purpose at Kingfisher is to make home improvement accessible
to everyone.
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 at a time when the Company's
accounts are not yet finalised and the Company is still preparing
its financial results for the full year ended 31 January 2020. 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. It has been necessary to
make an announcement in response to the COVID-19 pandemic health
crises causing countries in which the Group operates to react in
ways that impact the freedom of movement of citizens and changing
normal working, living and supply and demand patterns. 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).
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" or "believe" (or the
negatives thereof) or other variations thereon or comparable
terminology. These forward-looking statements include all matters
that are not historical facts and include 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, changes in tax
rates, liquidity, prospects, growth and strategies, acts of war or
terrorism worldwide, work stoppages, slowdowns or strikes, public
health crises, outbreaks of contagious disease or environmental
disaster. By their nature, forward-looking statements involve
inherent risks, assumptions and uncertainties that could cause
actual events or results or actual performance of the Company 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 in the company's Annual Report (as published). No
representation or warranty is made as to the achievement or
reasonableness of and no reliance should be placed on such
forward-looking statements.
The Company does not undertake any obligation to update or
revise any forward-looking statement to reflect any new information
or change in circumstances or in the Company's expectations.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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