Kingfisher plc (LON:KGF) has today announced its half year results for the 6 months ended 31 July 2019.
H1 19/20 Group results:
· Total sales down 0.9% in constant currency
· LFL down 1.8% with growth in Screwfix, Poland and Romania offset by B&Q and France
· Transformation activity continued across the Group including significant new range implementation in H1
o Unified product (COGS) now 59% (H1 18/19: 42%); H1 unified sales up 0.4%
o Digital sales* up 18%; now 7% of total Group sales (H1 18/19: 6%)
· H1 Group gross margin % up 60 basis points, largely driven by sourcing benefits
o Unified sourcing benefits contributed 80 basis points to Group gross margin %, outweighing clearance impact of -40 basis points
o Gross margin % for UK and Brico Dépôt France up
· Retail profit down 4.4% in constant currency, largely driven by France
· Adjusted pre-tax profit up 3.7%, reflecting lower transformation P&L costs*
· Statutory pre-tax profit down 12.5%, after exceptional items*
· Balance sheet remains strong
o Net debt (post-IFRS 16) reduced by £158m since year end
o Net debt (post-IFRS 16) to last twelve months’ EBITDA* multiple of 1.8 times
Outlook for FY 19/20:
· Focused on improving execution and delivering priorities for the year, including the launch of key new and differentiated ranges (e.g. B&Q kitchens in H2 19/20) and optimising the implementation of key transformation enablers
· Outlook by geography remains mixed; continued uncertainty around UK consumer demand
· Continue to expect FY 19/20 gross margin % after clearance to be flat(3), including c. £30-35m of incremental clearance costs (including B&Q kitchens in H2 19/20)
· Thierry Garnier to join as CEO on 25 September
*Throughout this release ‘*’ indicates the first instance of a term defined and explained in the Glossary (Section 5). Not all of the figures and ratios used are readily available from the unaudited half year results included in part 2 of the announcement. These non-GAAP measures (also known as alternative performance measures), including constant currency and like-for-like sales growth, underlying and adjusted profit measures, management believes are both useful and necessary to better understand the Group’s results. Where required, a reconciliation to statutory amounts is set out in the Financial Review (Section 4).
(1) FY 18/19 comparatives have been restated for IFRS 16 ‘Leases’. Refer to note 18 of the half year condensed financial statements (in part 2 of this announcement) for detailed restatement tables and associated commentary
(2) Net debt includes £2.6 billion lease liabilities under IFRS 16 in H1 19/20 (H1 18/19: £2.8 billion)
(3) Gross margin % movement excluding Russia and Iberia
Véronique Laury, Chief Executive Officer, said:
“Our transformation activity continued in the first half of this year, including new range launches across the Group and the rollout of further capabilities within our unified IT platform. These activities resulted in some ongoing disruption that impacted sales at B&Q and Castorama France. This was partly offset by positive sales performances in Screwfix, which continues to grow its market share, and Poland.
“It has been a great privilege to lead Kingfisher during a period of significant change, both in retail and within our business, and I would like to take this opportunity to thank all of our colleagues for their tireless commitment.”
Andy Cosslett, Chairman, said:
“The Board and I would like to thank Véronique for her vision and her determination in laying the foundations for our future growth. She leaves with our best wishes.
“In Thierry Garnier, who joins Kingfisher next week, we have found the right individual with the right skills and experience to build on the platform that we are establishing. In the near term our focus will be on improving execution and delivering on our key priorities for the year. Thierry will bring a fresh perspective to the Group as we focus on delivering growth in shareholder value and creating a compelling experience for our customers and colleagues.”