Kingfisher plc has reported Q3 total sales growth +1.7% with 3-year LFL +15.3%. (Q3 trading update to 31 October 2022). In a highly inflationary market volumes will have been down YoY. In the UK, B&Q sales declined by -2.7% at a total level and LFLs were down by -3.5%. Screwfix sales were up +4.9% following 17 new stores opened in the quarter, 48 year to date and a plan for 80 by 31st January 2023. LFL growth was -0.5%. In a year with UK probably in recession, the company reports expected profits of c.£730m to £760m.
Key points
• Third quarter sales of £3.3bn; total sales +1.7% in constant currency and LFL +0.2%
• Sales significantly ahead of pre-pandemic performance (3-year LFL +15.3%), supported by continued market share gains
• Good start to trading in the fourth quarter with 3-year LFL +16.2% and LFL +2.8% for the three weeks to 19 November 2022
• Strong energy efficiency product demand supporting DIY sales
• Trade customers continuing to see robust pipelines; strong TradePoint performance (LFL +1.9% and 3-year LFL +29.5%), and Screwfix gaining significant market share in the UK
• Opened first two Screwfix stores in France; meaningful step-up in store roll-outs planned for 2023
• Strong omni-channel engagement with e-commerce sales 3-year growth of +138% (YoY growth of +2.3%); representing 16% of Group sales (Q3 19/20: 8%). Continued growth of B&Q marketplace in Q3, and successful marketplace launches in Spain and Portugal
• Continuing to deliver value to customers whilst managing inflation pressures effectively
• Good product availability and effective supply chain management
• Anticipate FY 22/23 adjusted pre-tax profit in the range of c.£730m to £760m
Thierry Garnier, Chief Executive Officer, said: “Our sales trends continued to be resilient, with like-for-like sales 15.3% ahead of prepandemic levels in the quarter. This was supported by continued market share growth, including strong gains at Screwfix, TradePoint and Castorama Poland. While the market backdrop remains challenging, DIY sales continue to be supported by new industry trends such as more working from home and a clear step-up in customer investment in energy saving and efficiency. DIFM and trade activity also continues to be well supported by robust pipelines for home improvement work.
“Competitive pricing remains a priority. With our customers facing rising living costs, we are determined to make home improvement affordable and accessible – particularly through our own exclusive brands which represent 45% of our sales. “We continue to execute our strategy at pace, and to invest for growth. Last month marked a key moment in our history with the opening of our first Screwfix store in France, with a total of four to five stores due to open this financial year and many more planned for 2023. We launched our e-commerce marketplace in Spain and Portugal, building upon the early success of B&Q’s marketplace in the UK. We have also launched energy-saving tools in the UK and France, to help customers diagnose and access products and services to increase the efficiency of their homes ahead of the winter. We have seen a very positive take-up of these services so far, with B&Q, for example, taking nearly 1,000 appointment bookings within the first three days of launch.
“While we continue to be vigilant against macroeconomic uncertainty, we remain confident in both the resilience of our industry and in continuing to grow ahead of our markets.”
Current trading and outlook
- The fourth quarter has started well, with good trading momentum.
- For the three weeks to 19 November 2022, LFL sales were +2.8% and +16.2% on a 3-year basis.
- Sales remain resilient across our customer segments (DIY and DIFM/trade) and banners, with ongoing strength in energy efficiency product sales and demand from the trade segment.
- Looking ahead, we remain mindful of the current backdrop of heightened macroeconomic uncertainty.
- We continue to focus on offering customers value at all price points, whilst also managing inflationary pressures effectively.
- We are confident in our diverse and resilient business model, and our priority remains consistent execution against our strategy to drive top line and market share growth. Furthermore, we remain committed to active and responsive management of our costs, and are on track with our plans to sell through a large part of the ‘buffer’ stock held as of 31 July 2022.
- Regarding our profit guidance for this year, we anticipate FY 22/23 adjusted pre-tax profit to be in the range of c.£730m to £760m. This includes additional P&L investments to strengthen our Screwfix France store opening plan, additional wage support for colleagues, and slightly higher energy costs.
UK & IRELAND
B&Q
- Total sales +0.1% (LFL -2.3%; 3-year LFL +12.9%), with trading in Q3 adversely impacted by the abnormally warmer weather in October.
- Store closures across the UK in relation to Her Majesty’s funeral impacted UK & Ireland LFL sales in Q3 by -0.6%
- B&Q sales -2.7%. LFL -3.5% (3-year LFL +13.1%), with sales in line with expectations across all categories. In particular, building & joinery continues to see strong momentum, with a positive LFL supported by demand from trade customers and from high demand of insulation.
- Showroom sales performed well in the quarter, with resilient demand in the 3 bathroom & storage category.
- Whilst outdoor sales were down YoY given a strong comparative from the prior year’s clearance activity, sales remain strong versus prepandemic levels.
- Overall, LFL sales of weather-related categories were -11.5% (+14.6% on a 3-year LFL basis).
- LFL sales of non-weather-related categories were -1.9% (+11.6% on a 3-year LFL basis).
- B&Q’s total e-commerce sales moved into positive YoY growth in Q3, driven by its marketplace proposition which continues to see strong growth since its launch in March.
- Marketplace reached a penetration of 13% in October (i.e., B&Q’s marketplace gross sales divided by B&Q’s total e-commerce sales).
- TradePoint, B&Q’s trade-focused banner, continued to outperform with LFL sales +1.9% and 3-year LFL sales +29.5%.
- TradePoint sales were 23% of B&Q sales (Q3 21/22: 22%).
Screwfix
- Screwfix sales +4.9%. LFL -0.5% (3-year LFL +12.4%), with demand from trade customers supporting a strong YoY performance in the building & joinery and bathroom & storage categories.
The business saw resilient sales from its tools & hardware and EPHC (electricals, plumbing, heating & cooling) categories.
- Screwfix opened 17 new stores in Q3 in the UK and Republic of Ireland, with 48 new stores opened in the year to date, and remains on track to open 80 new stores in these countries during this financial year.
- In addition, Screwfix opened its first two stores in France (in October and November respectively), with a total of four to five openings planned for this financial year.
- Note that the results of Screwfix France are recorded within the ‘Other International’ division.
FRANCE
- Total sales +0.6% (LFL +0.5%; 3-year LFL +14.6%).
- The home improvement industry in France was adversely impacted by abnormally warmer weather in October, as well as strikes across petrol stations in France affecting customer footfall.
- Castorama sales +0.8%. LFL +0.8% (3-year LFL +16.6%), reflecting resilient sales from both DIY and DIFM/trade customers.
- Most categories saw good 3-year growth, with sales from the building & joinery and EPHC categories particularly strong YoY, and with the latter seeing robust growth in heating products and more energy-efficient solutions.
- LFL sales of weather-related categories were +2.9% (+30.8% on a 3-year LFL basis). LFL sales of non-weather-related categories were flat (+13.2% on a 3-year LFL basis).
- Brico Dépôt sales +0.2%. LFL +0.2% (3-year LFL +12.7%), reflecting resilient sales and YoY growth from most categories.
- The business achieved strong YoY and 3-year growth across EPHC and building & joinery through an impressive performance in insulation sales. Brico Dépôt continues to drive increased customer engagement and improved price perception, as the business focuses on further strengthening its discounter credentials and differentiating its ranges.
OTHER INTERNATIONAL
- Poland sales +10.5%. LFL +7.6% (3-year LFL +21.3%), supported by strong market share gains. Positive LFL and strong 3-year performance across all categories, with exceptional growth in the kitchen category supported by the development of our new ranges and customer journey. LFL sales of weather-related categories were +21.7% (+45.3% on a 3-year LFL basis). LFL sales of non-weather-related categories were +5.2% (+17.7% on a 3-year LFL basis). A further two new stores opened in Poland in Q3, with five new stores opened in the year to date.
- Iberia sales +3.4%. LFL +3.4% (3-year LFL +19.8%), supported by strong growth in seasonal categories, especially in outdoor and EPHC given the extended heatwave across August. Good 3-year performance in the building & joinery, outdoor and EPHC categories.
- Romania sales +4.2%. LFL +4.2% (3-year LFL +34.6%), reflecting robust sales across most categories with notable strength in kitchens and surfaces & décor.