Kingfisher PLC (LON:KGF), today announced Q3 results to 31 October 2018
Financial highlights
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Véronique Laury, Kingfisher Chief Executive Officer, said:
“We continue to make progress on our ONE Kingfisher transformation. We remain on track to achieve our key strategic milestones for the third year in a row, and increased our gross margin in the quarter.
“Transformation on this scale is tough, and we are operating in a difficult retail environment. We face challenges and we are addressing them. Our main challenge is Castorama France and we shared our action plan to fix it at the half year. Our action plan is now implemented for this year. We have accelerated our move to an everyday low price strategy and have launched a new marketing campaign to make it visible to our customers, however there is no quick fix.
“We are committed to our plan and to building a strong business for the long-term. As part of this commitment, we have taken the decision to exit Russia, Spain and Portugal. This will allow us to apply our strategy with more focus and efficiency in our main markets where we have, or can reach, a market leading position and create good homes by making home improvement accessible for everyone.
“Finally, I’m pleased to announce we are also returning a further £50m via share buyback which completes our £600m capital return commitment in the first three years of the plan.”
Strategic decisions
· Exiting Russia, Spain & Portugal to focus on markets where we have, or can reach, a market leading position
Q3 performance
· Q3 total sales up 1.2% in constant currency, LFL down 1.3% reflecting continued weak sales in Castorama France
· Q3 Group gross margin after clearance up 40bps versus Q3 last year (H1 down 40bps)
· Year to date gross margin after clearance is up in UK, Poland and Brico Dépôt France
FY 18/19 technical guidance
· In FY 18/19 expect to grow the gross margin after clearance in the UK, Poland and Brico Dépôt France however the outlook for Castorama France is more uncertain given difficult trading and the ongoing impact of recent national demonstrations
· Completing the final £50m tranche of c.£600m capital return commitment(5) via share buyback (£140m by end of FY 18/19)
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Q3 trading highlights by division (in constant currencies):
UK & IRELAND Total sales +1.4% (LFL -0.7%) · B&Q UK & Ireland sales -2.8%. LFL -2.9% including -c.1.5% impact from the discontinuation of showroom installation services · Screwfix sales +10.6%. LFL +4.1% with 9 new outlets opened during Q3
FRANCE Total sales -3.1% (LFL -3.4%). Sales for the home improvement market (Banque de France data(6)) were flat in Q3 · Castorama sales -7.6%. LFL -7.3% reflecting continued weak footfall and the impact of transformation-related activity · Brico Dépôt sales +2.4%. LFL +1.1% reflecting good growth from the new unified ranges, which continue to re-energise the Brico Dépôt offer
OTHER INTERNATIONAL Total sales in Poland +3.9% (LFL +1.4%) despite the introduction of new laws on Sunday trading and against a strong comparative (Q3 17/18 LFL: +6.0%)
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