4th Quarter Trading Update
Kingfisher PLC
16 February 2006
EMBARGOED UNTIL 0700 HOURS
Thursday 16 February 2006
Kingfisher plc
Fourth Quarter trading update (unaudited) for the 13 weeks ended 28 January 2006
Group Financial Highlights
2005/06 2004/05 Total Change Constant Currency Like-for-like (LFL)
sales
Retail sales £1,863m £1,764m +5.6% +6.0% (0.5)%
Q4 Highlights (all figures are in constant currency)
• The UK consumer home improvement market continues to be very weak.
• Underlying B&Q sales outperformed the DIY market but reported sales
fell 6% (-9%LFL).
• Actions including price reductions, extended promotions and stock
clearance resulted in a lower gross margin percentage.
• Outside the UK, sales were up 17% (+6.2% LFL) with good progress
in all Kingfisher's major markets.
• In France, Castorama and Brico Depot outperformed the DIY market
with total sales up nearly 7% (+2.5% LFL).
• In Rest of Europe, total sales were up 38% (+19% LFL).
• In Asia, total sales were up 59% (+8% LFL).
2005/06 full year
• Kingfisher expects to announce on 21 March 2006 full year
pre-exceptional profit before tax in line with the current consensus of
analyst expectations. Year end net debt is expected to be under
£1.4 billion.
Gerry Murphy, Group Chief Executive, said:
'The UK home improvement market remains depressed and price competitive. B&Q's
new management team has acted decisively to support short-term trading, manage
stocks and reduce costs at the same time as accelerating the development of B&
Q's stores, ranges and services for the future.
'Outside the UK, now half Kingfisher's sales and profits, strong growth
continues and we are making good progress with our strategy of strengthening our
position in major markets, rolling out developing businesses and moving into new
high growth markets.'
UK
B&Q's reported sales fell 6.1% to £850.3 million (-9.0% LFL). Underlying LFL
sales were down 6% before adjustment for sales of kitchens and bathrooms which
will be delivered in 2006/07. B&Q sales outperformed the overall DIY market*
during the quarter and for the year as a whole. All categories were weak,
although trade-related sales remained relatively resilient.
New management at B&Q continued with its action programme to support B&Q's
immediate and longer-term trading with particular focus on:
• Price competitiveness - prices on everyday products continued to be
lowered and promotions were extended on kitchen and bathroom ranges in a weak
January. Pricing initiatives were successful in driving customer traffic and
improving market share.
• Range and store development - roll-out of a significantly improved
range of ceramics and the new range of premium kitchens ('Select') continued in
the quarter. One new Warehouse store opened in Milton Keynes showcasing the
latest display techniques and new ranges. One new mini-Warehouse store was
opened and six existing stores were converted to the mini-Warehouse format.
• Service improvement - results from trials of 'Service Squad' were
encouraging and roll-out continued towards the target of 200 stores in 2006.
• Cost reduction - benefits from the streamlining of B&Q's corporate
offices started to be realised in the quarter.
Promotions stimulated volume sales and reduced stock levels but impacted gross
margins, as did markdowns to clear stocks in the 17 stores closed in January,
and ongoing price reductions. For the full 2005/06 year, B&Q expects gross
margin percentage to have fallen by just over 200 basis points.
As previously announced, exceptional charges of around £200 million arose in
2005/06, of which approximately £65 million is non-cash, due to the programme of
store rationalisation and the streamlining of B&Q's corporate offices. In
addition, following a review of its customer credit services, B&Q has given
notice of contract termination to its current supplier. This will result in an
exceptional charge in 2005/06, anticipating a repayment of £19 million from the
original £149 million proceeds on disposal of Time Retail Finance (Kingfisher's
former in-house credit business) in 2002. The change will have no net cash
impact and is expected to be beneficial from 2007/08 when new arrangements come
into effect. A £14 million gain on UK freehold property disposals in the quarter
will also be included in exceptional items.
In a stronger Trade market, Screwfix Direct performed well following last year's
operational expansion, with sales up 37.1% to £71.3 million. There was growth
in all ranges, in particular bathrooms and power tools. The six new Trade
Counter outlets are trading well and 15 more will be opened during 2006. Trade
Depot opened its first two branches in the quarter with encouraging early
results.
*Market data from GfK: B&Q sales before revenue recognition under IFRS.
FRANCE
French Market - According to Banque de France, comparable DIY store sales growth
in France was 0.1% in the three months to January. Kingfisher continued to
outperform the market with LFL sales up 2.5%. Total sales in France grew 3.9%
(+6.7% constant currency) to £607.6 million, in spite of weather-impacted demand
for outdoor projects in January.
Castorama sales increased 0.5% (+3.4% constant currency) to £348.5 million.
Castorama outperformed the market with LFL sales growth of 2.4%. Sales of new
decorative and showroom products introduced in the first half of the year
continued to improve, supported by major catalogues showcasing the new product
ranges.
Brico Depot sales grew 8.8% (+11.4% constant currency) to £259.1 million (+2.6%
LFL) against strong comparatives last year (+16%). Three new stores were
opened, taking the total to 73.
In 2006 a further six smaller Castorama stores will be converted to the Brico
Depot format.
REST OF EUROPE
REST OF EUROPE sales increased 39.8% (+37.9% constant currency) to £213.4
million (+18.8% LFL).
Castorama Poland sales increased 48.6% (+41.7% constant currency) to £118.6
million (+31.1% LFL) against weak comparatives following the introduction of
higher VAT rates in May 2004. Sales were strong across all categories, boosted
by customers purchasing ahead of a 31 December deadline for claiming tax relief
on construction and renovation projects. One new store opened taking the total
to 30.
Castorama Italy sales increased 16.3% (+19.0% constant currency) to £65.0
million (+5.0% LFL). This strong performance in a challenging market was
supported by new catalogues. Two new stores opened in the quarter, taking the
total to 26.
ASIA
ASIA sales increased 70.5% (+58.7% constant currency) to £119.0 million (+ 8.2%
LFL).
B&Q China sales increased 67.3% (+55.7% in constant currency) to £116.8 million
(+8.2% LFL). Growth was driven by strong installation service and trade sales.
During the quarter, five stores were opened, taking the total to 48. The
programme to integrate the 13 stores acquired from OBI in June is proceeding
well, with the first fully revamped conversions to the B&Q format coming on
stream at the end of the quarter. The conversion process is expected to be
completed during summer 2006.
Enquiries:
Ian Harding, Group Communications Director 020 7644 1029
Nigel Cope, Head of Communications 020 7644 1030
Heather Ward, Head of Investor Relations 020 7644 1032
Further copies of this announcement are available at www.kingfisher.com or by
application to: The Company Secretary, Kingfisher plc, 3 Sheldon Square, London,
W2 6PX.
Company Profile
Kingfisher plc is Europe's leading home improvement retail group and the third
largest in the world, with over 650 stores in 10 countries in Europe and Asia.
Its main retail brands are B&Q, Castorama, Brico Depot and Screwfix Direct.
Kingfisher also has a 21% interest in, and strategic alliance with, Hornbach,
Germany's leading DIY Warehouse retailer, with 123 stores in Germany and
neighbouring countries.
For the 13 weeks ended 28 January 2006
Retail sales £m 2005/6 2004/5 % change % change %
(reported) (constant) like-for-like
change
B&Q 850.3 905.3 (6.1)% (6.1)% (9.0)%
UK Trade (1) 72.3 52.0 39.0% 39.0% 37.1%
Total UK 922.6 957.3 (3.6)% (3.6)% (6.3)%
Castorama France 348.5 346.6 0.5% 3.4% 2.4%
Brico Depot 259.1 238.2 8.8% 11.4% 2.6%
Total France 607.6 584.8 3.9% 6.7% 2.5%
Castorama Poland 118.6 79.8 48.6% 41.7% 31.1%
Castorama Italy 65.0 55.9 16.3% 19.0% 5.0%
Other Europe(2) 29.8 16.9 76.3% 81.7% 0.6%
Rest of Europe 213.4 152.6 39.8% 37.9% 18.8%
B&Q China 116.8 69.8 67.3% 55.7% 8.2%
Other Asia 2.2 0.0 N/A N/A N/A
Total Asia 119.0 69.8 70.5% 58.7% 8.2%
Total 1,862.6 1,764.5 5.6% 6.0% (0.5)%
For the 52 weeks ended 28 January 2006
Retail sales £m 2005/6 2004/5 % change (reported) % change % like-for-like
(constant) change
B&Q 3,899.7 4,048.6 (3.7)% (3.7)% (7.8)%
UK Trade (1) 272.3 228.6 19.1% 19.1% 18.7%
Total UK 4,172.0 4,277.2 (2.5)% (2.5)% (6.3)%
Castorama France 1,582.9 1,571.1 0.8% 0.1% (0.2)%
Brico Depot 1,142.0 975.6 17.1% 16.3% 7.3%
Total France 2,724.9 2,546.7 7.0% 6.3% 2.7%
Castorama Poland 417.0 321.9 29.5% 15.0% 1.7%
Castorama Italy 266.9 229.5 16.3% 15.6% 5.8%
Other Europe (2) 111.3 62.6 77.8% 76.9% (2.7)%
Rest Of Europe 795.2 614.0 29.5% 21.1% 2.7%
B&Q China 312.8 211.7 47.8% 44.7% 7.4%
Other Asia 5.2 - N/A N/A N/A
Total Asia 318.0 211.7 50.2% 47.1% 7.4%
Total 8,010.1 7,649.6 4.7% 3.9% (2.2)%
2005/06 £1 =1.4649 euro: 2004/05 £1 = 1.4739 euro
(1) UK Trade includes Screwfix Direct and Trade Depot
(2) Other Europe includes Brico Depot Spain and B&Q Ireland.
This information is provided by RNS
The company news service from the London Stock Exchange MJBBLF