Kingfisher has provided an update on its performance for Q1 2024 (the 13 weeks to 30 April 2024).Key points
- Q1 sales of £3.3bn; total sales +0.3% (constant currency) and -0.3% (reported)
- LFL -0.9% including a +1.9% calendar impact (of which +1.1% relates to the leap year)
Q1 by region:
- UK & Ireland: share gains at B&Q supported by strong e-commerce and TradePoint sales; share gains and positive LFL at Screwfix
- France: sales in line with our expectation. Castorama and Brico Dépôt performing broadly in line with weaker market
- Poland: improved sales trend supported by stronger market
UK & IRELAND
- Total sales +2.7% (LFL +1.2%), with sales at both banners growing ahead of their respective markets (as measured by the British Retail Consortium, Barclays and GfK); particularly strong market share gains achieved at TradePoint and Screwfix.
- B&Q sales +0.4%. LFL +0.4%, supported by a strong performance in e-commerce and the trade segment. The business saw good LFL sales growth and improved volume trends in its core categories, particularly tools & hardware and building & joinery, partially offsetting a weak sales performance in ‘big-ticket’ categories. Seasonal category sales were positive, although impacted by wet weather in April. B&Q’s total e-commerce sales increased by 22.8% YoY, with an overall e-commerce sales penetration of 13.6% (Q1 23/24: 11.4%). This was driven by the further scaling of its marketplace, which reached a participation(11) of 41% in April. Marketplace GMV(6) increased by 99.4% YoY.
- TradePoint, B&Q’s trade-focused banner, delivered a strong performance with LFL sales of +8.5%, reaching a penetration of 23% of B&Q’s total sales (Q1 23/24: 21%). TradePoint continues to strengthen its product and services proposition for trade customers. Its loyalty programme continues to attract trade customers, with new sign-ups growing by c.40% YoY and total membership now at over 3.5 million.
- Screwfix sales +6.4%. LFL +2.4%, with robust demand from trade customers and strong market share gains. Positive YoY sales growth was seen in most categories, with notable performances in its tools & hardware and building & joinery categories. Screwfix opened seven new stores in the UK & Ireland, and remains on track to open up to 40 stores in these countries in this financial year. Screwfix Spares contributed c.2% to total Screwfix sales growth in Q1(12).
FRANCE
- Total sales -5.1% (LFL -5.3%), with trading, as expected, impacted by ongoing weakness in the broader market. Both banners performed broadly in line with the French home improvement market, based on external panel data and Kingfisher analysis.
- With the structural simplification of the French organisation now complete, the businesses are focused on improving their respective performance in line with the plan outlined in our FY 23/24 results in March. Castorama’s store restructuring and modernisation plan for its lowest performing stores, also outlined in our FY 23/24 results, has started well. The business has completed two rightsizings in the year to date, with one further rightsizing due to complete in H2. All three rightsized stores will, at the same time, benefit from a pervasive store refit along with one additional low-performing store. The refits will be similar to the concept successfully applied to the Castorama Englos store last year. The transfer to Brico Dépôt of one low-performing Castorama store is in motion, and we are making good progress towards our goal to start tests for two franchise stores within the next 12 months.
- Castorama sales -5.5%. LFL -5.5%, with market weakness reflected broadly across all categories, in particular ‘big-ticket’ category sales. Early results of Castorama’s e-commerce marketplace, launched in March, have been encouraging with the business focused on scaling up the proposition. Castorama also continues to trial its trade loyalty programme, with further roll-out to additional stores planned in Q2.
- Brico Dépôt sales -4.7%. LFL -5.2%, with its category performance broadly in line with Castorama and the wider market. Brico Dépôt opened one compact store in May, with three of these innovative 1,000 sqm format stores now open. The business continues to focus on capturing more of the trade opportunity, with positive results and customer engagement seen following the nationwide roll-out of its trade loyalty programme in February.
OTHER INTERNATIONAL
- Poland sales +3.1%. LFL +0.4%, supported by an improved consumer environment, and strong progress with initiatives to boost trade sales. Compared to Q4 23/24, Castorama saw improved LFL sales trends across its core and ‘big-ticket’ categories, with building & joinery, kitchen and tools & hardware all performing well. Sales of seasonal categories were positive, supported by successful range reviews. Castorama performed broadly in line with the market in the quarter (as measured by GfK). The business opened one big-box and one ‘Castorama Smart’ store in Q1, and is on track with its target of five store openings in this financial year. Castorama continues to see strong results from its trade customer initiatives, with c.100k sign-ups to the ‘CastoPro’ loyalty programme following its roll-out to all stores in February.
- Iberia sales +1.9%. LFL +1.9%, with good performance seen in the building & joinery, bathroom & storage and kitchen categories. Sales growth in seasonal categories were impacted by positive prior year comparatives.
- Romania sales +12.3%. LFL +14.7%, reflecting a strong performance in its outdoor, building & joinery and surfaces & décors categories.
- Other consists of the consolidated sales of Screwfix International, NeedHelp, and from franchise and wholesale agreements. While these businesses are in their early investment phase, we continue to be encouraged by the results we have seen to date. Screwfix opened three stores in France in the quarter, with a total of 23 stores in operation as of 30 April 2024. The business continues to grow its customer base and retention rates, as well as increasing brand awareness both locally and nationally.
Q1 by category:
- Core (66% of sales): resilient performance (LFL -0.3%), with sequential improvement in YoY volume trends vs Q4 23/24
- Big-ticket (15% of sales): weak sales as expected (LFL -6.3%), reflecting trends across the broader market
- Seasonal (19% of sales): resilient sales (LFL +1.9%) despite unfavourable weather in April
- Volume and retail price inflation flat YoY; negative mix impact on average selling price from lower ‘big-ticket’ sales
- Q2 trading to date in line with underlying Q1 trends, with LFL -2.5%
Strategic priorities update:
- Opened three Screwfix stores in France and seven in the UK & Ireland
- Total e-commerce sales +12.7%; now 18.8% of Group sales (Q1 23/24: 16.9%)
- Strong growth of e-commerce marketplace at B&Q (GMV +99.4% YoY), and launch at Castorama France in March
- TradePoint LFL sales +8.5%. Trade loyalty programmes now live in all banners
- Full year guidance unchanged: expect FY 24/25 adjusted PBT of c.£490m to £550m and free cash flow of c.£350m to £410m
Current trading and outlookThe second quarter has started in line with the underlying sales trends of Q1, with Group LFL sales -2.5% for the three weeks to 18 May 2024.On the overall market outlook for 2024, we remain cautious due to the lag between housing demand and home improvement demand. As such, the scenarios we set out in our FY 23/24 results for the growth of our total addressable home improvement markets in the UK & Ireland, France and Poland in 2024, versus 2023, are unchanged.
Against this backdrop, we are focused on growing ahead of our markets by leveraging our key strategic priorities. We are confident in the delivery of c.£120m of additional cost reductions and productivity gains this year, to partially offset higher pay rates and technology investments. As a result, our FY 24/25 guidance remains unchanged, expecting adjusted PBT of c.£490m to £550m, and free cash flow of c.£350m to £410m.
