TIDMKGF
RNS Number : 2021Z
Kingfisher PLC
20 May 2021
Q1 trading update to 30 April 2021
Sales of GBP3.4 billion; LFL(1) up 64% and 2-year LFL(2) up
23%
20 May 2021: Kingfisher plc ('Company', 'Group' or 'Kingfisher')
is today providing its Q1 21/22 sales.
Unaudited Q1 21/22 sales (three months ended 30 April 2021)
Sales % Total % Total % LFL % 2-year LFL
2021/22 Change Change Change Change
--------------------------------- --------- --------- ------------------ ------------------ ------------------
GBPm Reported Constant currency Constant currency Constant currency
UK & Ireland 1,827 +66.8% +66.8% +65.0% +38.6%
- B&Q 1,212 +82.7% +82.7% +81.9% +42.3%
- Screwfix 615 +42.5% +42.5% +39.0% +32.5%
France 1,177 +97.4% +98.8% +101.7% +18.1%
- Castorama 583 +94.5% +95.8% +101.8% +13.9%
- Brico Dépôt 594 +100.3% +101.7% +101.7% +22.7%
Other International (ex-Russia) 444 +9.4% +13.0% +5.9% (11.0)%
- Poland 281 (12.1)% (8.9)% (12.0)% (20.5)%
- Iberia(3) 90 +110.8% +112.3% +112.3% +12.1%
- Romania(4) 72 +67.2% +71.1% +27.4% +16.6%
- Other(5) 1 n/a n/a n/a n/a
Total Group (ex-Russia) 3,448 +64.4% +65.7% +64.2% +22.5%
--------------------------------- --------- --------- ------------------ ------------------ ------------------
- Russia(6) - (100.0)% (100.0)% n/a n/a
Total Group 3,448 +60.0% +61.9% +64.2% +22.5%
--------------------------------- --------- --------- ------------------ ------------------ ------------------
Key points
-- Continuing to make significant progress against 'Powered by Kingfisher' strategic priorities
-- Growing sales ahead of the market in the UK and France
-- Total sales up 61.9% in constant currency at GBP3.4 billion,
reflecting strong demand in all categories (against weak
comparatives due to temporary store closures in the prior year)
-- LFL sales up 64.2% and corresponding 2-year LFL up 22.5%
o Strong performance in the UK and France, despite COVID-related
restrictions impacting French banners through most of the
quarter
o Poland impacted by COVID-related temporary store closures for
five weeks, following a national lockdown announced in late March
2021
o Transaction volume and average basket value both up
-- E-commerce sales up 63% (2-year growth up 258%); now 21% of Group sales (FY 20/21: 18%)
-- Q2 21/22 LFL sales (to 15 May 2021) (7) up 8.2% ( 2-year LFL
up 25.0%), reflecting continued strong demand
-- All Kingfisher stores now open, following temporary store closures in France and Poland
-- Raising H1 21/22 LFL sales outlook to 'mid-to-high teens' (from 'low double-digit')
-- Anticipate H1 adjusted pre-tax profit to be ahead of our
previous expectations, in the range of c.GBP580 to 600 million
Thierry Garnier, Chief Executive Officer, said:
"I am extremely grateful to all our colleagues for their
continuous hard work and flexibility, enabling our banners to
remain trading safely during these difficult times.
"The Group delivered strong sales growth in the first quarter,
with LFL sales up 64% and up by 23% on a two-year basis. This is a
testament to the efforts of our colleagues, the skill and
professionalism of our supply chain teams, and the responsiveness
in managing daily changes within all our store operations. We
continue to see high levels of demand from both new and existing
customers, with clear progress made on our 'Powered by Kingfisher'
strategic priorities, especially in four key areas.
"Firstly, e-commerce continues to be our fastest-growing channel
with two-year growth of over 250%, now accounting for 21% of Group
sales. During the quarter we established a new agile operating
model for our technology and digital teams, and further
strengthened these teams with multiple new hires.
"Secondly, we are excited to have launched Screwfix as a
pure-play online retailer in France in late April. Thirdly, our new
own exclusive brand kitchen range is now available in all key
markets, with very positive results despite lockdown
restrictions.
"And finally we continue to develop, test and roll out multiple
innovative propositions for our customers, with more compact store
tests, a new mobile app for Screwfix, self-checkout terminals and
our new tool for 3D kitchen and bathroom design. We have also
started to roll out our NeedHelp services marketplace in B&Q
and Poland.
"With the strong start to the year, we now anticipate first half
sales and adjusted pre-tax profit to be ahead of our previous
expectations. Whilst the second half of the financial year remains
naturally uncertain, we continue to see supportive long-term trends
for our industry and are confident of continued outperformance of
our wider markets."
Outlook
Given the profile of trading during FY 20/21, we continue to
expect distinct performances in the two halves of FY 21/22.
With the strength of our performance to date and the continued
delivery against our strategic objectives, we now expect
mid-to-high teens Group LFL sales growth in H1 21/22 (previously
'low double-digit'). As a result, we anticipate a higher H1
adjusted pre-tax profit, in the range of c.GBP580 to 600
million.
For H2 21/22 , we maintain our original guidance and continue to
plan for Group LFL sales scenarios in H2 of -15% to -5%
(representing 2-year LFLs for H2 of -1% to +11%), given the strong
comparable period performance (H2 20/21: Group LFL sales +16.6%)
and continued uncertainty over the macroeconomic and consumer
environment from COVID.
For FY 21/22 , we are now aiming to grow full year adjusted
pre-tax profit (excluding GBP85 million of non-recurring net cost
savings in FY 20/21) ahead of sales (8) (previous guidance 'in line
with sales').
Supply chain and availability
The key risks around stock availability continue to be driven by
polarised demand within some of our categories, where our suppliers
have been challenged in keeping up with high order levels. This has
been exacerbated by challenges around the supply of certain raw
materials. In addition, the pandemic (together with events such as
the Suez Canal container ship blockage) continue to place a
considerable strain, industry-wide, on the international logistics
infrastructure (in particular, the cost and availability of
shipping containers). We expect these challenges to continue for at
least the next six months.
Despite these significant challenges, our overall stock
availability is gradually improving. To date, we have been able to
manage our supply and logistics needs adequately, and will continue
to focus on availability as we progress through the key trading
season.
As largely anticipated, we are also seeing inflation pressure
from certain raw materials and shipping container costs. We are
absolutely committed to remaining competitive with our prices, and
are engaging with our suppliers and partners to manage the cost
implications that are being felt across the industry as efficiently
as possible.
Operational status
All our c.1,400 stores are currently open for in-store
purchasing and click & collect, under strict social distancing
and safety protocols. Kingfisher remains committed to meeting the
essential needs of customers safely, and ensuring colleague safety
and wellness.
In the United Kingdom, restrictions imposed from late December
2020 meant that discrete areas of certain B&Q stores (e.g.
showrooms in England, Wales and Scotland) were temporarily closed
until early-to-mid April 2021. During this period of restrictions,
B&Q operated a virtual sales model for kitchens and bathrooms,
with tens of thousands of virtual showroom planning sessions
successfully conducted since the start of 2021.
In France, since late January 2021, the government gradually
instructed certain regions (départements) with higher COVID
infection rates to implement additional containment measures. A
national lockdown took effect on 3 April 2021, resulting in the
temporary closure of non-essential retailers.
While Castorama and Brico Dépôt stores retained their
'essential' retailer status, some départements required us to close
larger stores even before the national lockdown. The majority of
the temporary store closures took effect from early March 2021, and
since then up to 26 Castorama and four Brico Dépôt stores have been
temporarily closed for in-store browsing and purchasing. At all
stores impacted, click & collect, home delivery and virtual
showroom planning services remained available for the general
public.
In addition, all other Castorama and Brico Dépôt stores were
impacted by the temporary closure of non-essential areas of stores
(e.g. showrooms and certain areas of surfaces & décor),
following the commencement of the national lockdown on 3 April.
On 19 May 2021, restrictions on retailers in France were lifted.
All impacted Castorama and Brico Dépôt stores have reopened for
in-store browsing and purchasing.
In Poland, national lockdown restrictions were imposed on 27
March 2021, leading to the closure of all Castorama stores between
27 March and 3 May 2021. During some of this period, stores were
able to offer click & collect, home delivery, garden and
buildings products, as well as in-store access for professional
tradespeople. All stores fully reopened on 4 May.
In Iberia and Romania, while all stores remain open for in-store
browsing and purchasing, restrictions have been imposed in a small
number of regions (including reduced opening hours, weekend
closures, limits on the number of people allowed in stores, and
limits on access to stores from out of the city or region).
Trading since 1 February 2021
As announced on 22 March 2021, the first quarter of the year had
started strongly with Q1 21/22 LFL sales (to 18 March 2021) (9) up
24.2%, with the corresponding 2-year LFL also up 24.2%. The Group's
trading remained strong throughout the balance of the first
quarter, despite the impact of COVID-related restrictions on our
stores in France and Poland. Please refer to the 'Operational
status' summary above for further details.
Overall, Q1 21/22 LFL sales were up 64.2% ( 2-year LFL up
22.5%). Growth in Q1 was supported by strong demand in the UK and
France as well as continued e-commerce sales progress, with 2-year
growth of over 250%. Transaction volume and average basket value
both grew in the quarter.
The second quarter has also started positively, with Q2 21/22
LFL sales (to 15 May 2021) (7) up 8.2% ( 2-year LFL up 25.0%),
reflecting continued strength in the UK and France, and the
reopening of stores in Poland. Notwithstanding this good start to
the second quarter, we remain mindful of the tough comparable
period and continued uncertainty related to COVID.
LFL sales by month during Q1 (and Q2 to date)
Monthly sales % LFL Change
---------------------- -----------------------------------------------------------
Feb 2021 Mar 2021 Apr 2021 Q1 21/22 Q2 21/22
(to date) (7)
---------------------- --------- --------- --------- --------- ---------------
UK & Ireland +21.5% +58.6% +138.2% +65.0% +6.8%
France +10.2% +151.9% +265.8% +101.7% +8.3%
Other International (5.0)% +30.6% (8.2)% +5.9% +12.2%
- Poland (6.0)% +16.1% (45.5)% (12.0)% (3.3)%
- Iberia (5.7)% +149.1% +800.2% +112.3% +312.9%
- Romania(4) +3.2% +20.9% +57.0% +27.4% +10.0%
Group LFL(10) +13.1% +75.2% +132.4% +64.2% +8.2%
---------------------- --------- --------- --------- ---------------
E-commerce sales(11) +148.8% +131.0% +7.4% +62.8% +10.0%
2-year LFL sales by month during Q1 (and Q2 to date)
Monthly sales % 2-year LFL Change
---------------------- -----------------------------------------------------------
Feb 2021 Mar 2021 Apr 2021 Q1 21/22 Q2 21/22
(to date) (7)
---------------------- --------- --------- --------- --------- ---------------
UK & Ireland +29.0% +49.6% +35.9% +38.6% +23.9%
France +19.6% +21.0% +13.5% +18.1% +25.3%
Other International +5.0% +5.2% (37.2)% (11.0)% +27.1%
- Poland +4.5% +0.2% (56.6)% (20.5)% +28.9%
- Iberia +0.6% +20.9% +12.9% +12.1% +17.1%
- Romania(4) +19.6% +2.8% +34.6% +16.6% +34.4%
Group LFL(10) +21.8% +31.0% +14.4% +22.5% +25.0%
---------------------- --------- --------- --------- ---------------
E-commerce sales(11) +223.1% +266.1% +277.3% +257.5% +238.0%
Q1 trading highlights (in constant currencies)
UK & IRELAND
Total sales +66.8% (LFL +65.0%; 2-year LFL +38.6%). Continuing
to grow sales ahead of the market.
-- B&Q sales +82.7%. LFL +81.9% (2-year LFL +42.3%)
reflecting strong demand in all categories against weak
comparatives due to prior year temporary store closures. LFL sales
of weather-related categories were up 129%. LFL sales of
non-weather-related categories, including showroom, were up 66%.
B&Q's trade-focused banner, TradePoint, continued to improve
engagement with tradespeople, with LFL sales up 83% and 2-year LFL
sales up 43%. B&Q's new own exclusive brand (OEB) kitchen range
continues to perform well, and we are encouraged by the uptake of
our newly introduced installation services. Four new compact stores
were opened during Q1, including two store-in-store concessions
within ASDA stores.
-- Screwfix sales +42.5%. LFL +39.0% (2-year LFL +32.5%)
reflecting continued strong momentum from trade customers. The
business continued to strengthen its digital proposition, including
launching an upgraded mobile app which has been very well received
by customers, with mobile remaining the dominant channel of
ordering online. During Q1, five new stores were opened in the
UK.
FRANCE
Total sales +98.8% (LFL +101.7%; 2-year LFL +18.1%). Castorama
continued to grow sales ahead of the market in Q1 (LFL +101.8%), as
did Brico Dépôt (+101.7%), despite COVID-related restrictions
imposed by the French government leading to some temporary store
closures throughout the quarter. LFL sales for the home improvement
market (as measured by Banque de France data(12) ) were up 99.7% in
Q1.
-- Castorama sales +95.8%. LFL +101.8% (2-year LFL +13.9%)
reflecting strong demand in all categories (against weak
comparatives due to temporary store closures in the prior year).
LFL sales growth was negatively impacted by partial and temporary
store closures in Q1 21/22 (see 'Operational status' above), but
benefited by c.+5% from additional Sunday store openings. LFL sales
of weather-related categories were up 215%. LFL sales of
non-weather-related categories, including showroom, were up
80%.
-- Brico Dépôt sales +101.7%. LFL +101.7% (2-year LFL +22.7%)
reflecting strong demand in all categories (against weak
comparatives due to temporary store closures in the prior year) and
the continued focus on strengthening its discounter credentials and
differentiated ranges. Additional Sunday store openings contributed
c.+9% to LFL sales.
OTHER INTERNATIONAL
-- Poland sales (8.9) %. LFL (12.0)% (2-year LFL (20.5%))
largely reflecting the temporary closure of all stores between 27
March and 3 May 2021. The impact during this period was partially
offset by a strong uptake of click & collect, contactless
'Drive-thru' and car park collections, and home delivery services.
LFL sales of weather-related categories were down 26%. LFL sales of
non-weather-related categories, including showroom, were down 10%.
Four new stores were opened during Q1.
-- Iberia sales +112.3%. LFL +112.3% (2-year LFL +12.1%)
reflecting strong demand and weak comparables (due to prior year
temporary store closures).
-- Romania sales +71.1% (4) . LFL +27.4% (2-year LFL +16.6%)
reflecting strong demand across most categories, in particular
building & joinery and outdoor.
Supplementary information
FY 2021/22 Technical guidance
Significant updates to our previous guidance are noted below in
italics.
The following guidance applies in the event of no adverse change
in COVID-related confinement measures (for example, new lockdown
restrictions resulting in further store closures). Please also
refer to page 8 for further details regarding forward-looking
statements.
Income statement:
-- LFL sales outlook
- H1 21/22 - expect mid-to-high teens LFL sales growth (previous guidance 'low double-digit')
- H2 21/22 - continue to plan for LFL scenarios of -15% to -5%
(2-year LFLs for H2 of -1% to +11%). Range reflects uncertainty
over the macroeconomic and consumer environment in H2
-- Space
- Anticipate net space growth (excluding Russia) to impact total
sales by c.+1.5%, largely from the UK and Poland. Total sales
impact from the disposal of Russia will be c.-1.5%
-- Costs
- Central costs - expected to be broadly flat year on year (FY 20/21: GBP54m)
- COVID-related costs - expected to be c.GBP15m (previous guidance c.GBP10m; FY 20/21: GBP45m)
-- Net finance costs
- Expected to decrease by c.GBP10m as a result of lower lease
liability balance and lower non-lease interest (FY 20/21:
GBP160m)
-- Adjusted pre-tax profit
- Anticipate H1 adjusted pre-tax profit to be in the range of c.GBP580-600m
- Aiming to grow full year adjusted pre-tax profit (excluding
GBP85m of non-recurring net cost savings in FY 20/21) ahead of
sales(8) (previous guidance 'in line with sales')
-- Tax rate
- Group adjusted effective tax rate expected to be c.23%(13) (FY 20/21: 23%)
Cash flow:
-- Capital expenditure - continue to target gross capex of up to
3.5% of total sales, including c.GBP70m of capex deferred from FY
20/21 (FY 20/21: GBP281m; FY 19/20: GBP342m)
-- Tax - as anticipated, in Q1 21/22 we paid c.GBP64m (including
interest) to HMRC in relation to the EC state aid challenge
(previous guidance c.GBP57m excluding interest). The full amount is
being contested and is recorded as a receivable
-- Dividends - target dividend cover range of 2.25 to 2.75
times, based on adjusted basic earnings per share
Footnotes
(1) LFL (like-for-like) sales growth represents the constant
currency, year on year sales growth for stores that have been open
for more than one year. Stores temporarily closed or otherwise
impacted due to COVID are also included.
(2) 2-year LFL is calculated by compounding current and prior
year LFL growth. For example, current year LFL growth of 10% and
prior year LFL growth of 5% results in 2-year LFL growth of 15.5%.
Prior year LFL growth excludes Russia for the purposes of the Group
and Other International 2-year LFL calculations.
(3) Brico Dépôt Spain and Portugal.
(4) Kingfisher's subsidiary in Romania has historically prepared
its financial statements to 31 December. In FY 21/22, Romania is
migrating to Kingfisher's financial reporting calendar (year ending
31 January 2022). Its quarterly sales presented therefore include
one additional month of results (April 2021) in order to facilitate
the alignment to Kingfisher's financial reporting calendar.
Reported and constant currency variances for Romania sales are for
January to April 2021 (compared against January to March 2020),
whilst monthly, quarterly and 2-year LFL sales growth for Romania
compares February to April 2021 to the equivalent periods in the
prior years. Romania's LFL sales growth in the month of January
2021 was 22.2%.
(5) 'Other' consists of the consolidated results of NeedHelp,
which was acquired in November 2020, and revenue from franchise
agreements.
(6) Kingfisher completed the sale of Castorama Russia on 30
September 2020.
(7) 'Q2 21/22 LFL sales (to 15 May 2021)' and 'Q2 21/22 (to
date)' represents the period from 2 May 2021 to 15 May 2021
(compared against the equivalent period in the prior year, from 3
May 2020 to 16 May 2020). The corresponding 2-year LFL represents
the period from 2 May 2021 to 15 May 2021 compared against the
equivalent period in FY 19/20 (i.e. from 5 May 2019 to 18 May
2019). The figures are provisional and excludes certain non-cash
accounting adjustments relating to revenue recognition.
(8) Group total sales growth and adjusted pre-tax profit growth
in constant currency.
(9) 'Q1 21/22 LFL sales (to 18 March 2021)' represents the
period from 31 January 2021 to 18 March 2021 (compared against the
equivalent period in the prior year, from 2 February 2020 to 19
March 2020). The figure is provisional and excludes certain
non-cash accounting adjustments relating to revenue
recognition.
(10) Group LFL includes e-commerce sales, and excludes Koçta
(Kingfisher's 50% JV in Turkey).
(11) E-commerce sales are total sales derived from online
transactions, including click & collect. This includes sales
transacted on any device, however not sales through a call centre.
E-commerce sales change is in constant currency and covers the
total Group.
(12) Banque de France data for DIY retail like-for-like sales
(non-seasonally adjusted). Includes relocated and extended stores
http://webstat.banque-france.fr/en/browse.do?node=5384326 .
(13) Subject to the blend of profit within the Group's various
jurisdictions.
Contacts
Tel: Email:
Investor Relations +44 (0) 20 7644 investorenquiries@kingfisher.com
1082
Media Relations +44 (0) 20 7644 corpcomms@kingfisher.com
1030
Teneo +44 (0) 20 7420 Kfteam@teneo.com
3184
Q1 trading update and data tables
This announcement and data tables for Q1 21/22 sales can be
downloaded from www.kingfisher.com/investors .
We can be followed on Twitter (@kingfisherplc) with the Q1
results tag #KGFQ1.
Half year 21/22 results
Our next scheduled announcement will be our results for the six
months ended 31 July 2021, provisionally set for 21 September
2021.
American Depository Receipts
Kingfisher American Depository Receipts are traded in the US on
the OTCQX platform: (OTCQX: KGFHY)
http://www.otcmarkets.com/stock/KGFHY/quote .
About Kingfisher plc
Kingfisher plc is an international home improvement company with
approximately 1,400 stores, supported by a team of over 83,000
colleagues. We operate in eight countries across Europe under
retail banners including B&Q, Castorama, Brico Dépôt, Screwfix,
TradePoint and Koçta . We offer home improvement products and
services to consumers and trade professionals who shop in our
stores and via our e-commerce channels. At Kingfisher, our purpose
is to help make better homes accessible for 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).
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. 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",
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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, changes to customer preferences, liquidity, prospects,
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stoppages, slowdowns or strikes, public health crises, outbreaks of
contagious disease, environmental disruption or political
volatility. By their nature, forward-looking statements involve
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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 of the Company's Annual Report (as published). No
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reasonableness of, and no reliance should be placed on, such
forward-looking statements.
The Company does not undertake any obligation to update or
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