Kingfisher(KGFHY) - 2022 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total sales decreased by 2.8% year-on-year to £6.8 billion, which is resilient given the strong comparatives from the previous year when sales were up by over 22% [11][88] - Like-for-like sales were down 4.1% year-on-year but up 16.6% on a three-year basis, indicating growth ahead of the market [11][88] - Adjusted profit before tax decreased by 29% to £472 million, but was up by 40% compared to the same period in 2019 [13][90] - Gross margin decreased by 130 basis points year-on-year, attributed to lower promotional activity and category mix impacts [38][89] Business Line Data and Key Metrics Changes - Sales from DIY and DIFM/trade categories remained resilient, with a 50-50 split maintained between these categories [9][17] - E-commerce sales decreased by 19% in the period, but were up over 150% on a three-year basis, with e-commerce penetration at 16% [12][55] - Screwfix saw like-for-like sales down 8.8% but up 14.4% on a three-year basis, reflecting resilient demand from trade customers [95] Market Data and Key Metrics Changes - In the UK and Ireland, total sales decreased by 9.8% to £3.2 billion, with like-for-like sales down 11.6% [91] - France's like-for-like sales were down 3% but up 13.6% on a three-year basis, with retail profit increasing by 2.4% [97] - Poland experienced strong performance with like-for-like sales up 25.9%, supported by significant market share gains [99] Company Strategy and Development Direction - The company is focused on strategic objectives including e-commerce growth, trade business development, and expansion of Screwfix and operations in Poland [9][10] - Kingfisher aims to leverage its diversified business model to capitalize on long-term trends in home improvement and energy efficiency [16][19] - The company is committed to maintaining attractive shareholder returns through dividends and share buybacks, reflecting confidence in growth opportunities [10][121] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the home improvement sector, citing ongoing demand for repairs and renovations [19][22] - The company anticipates a range of outcomes for full-year adjusted profit before tax between £730 million and £770 million, with a focus on effective cost management [15][116] - Management noted that inflation pressures are being managed effectively, with early signs of peak prices for some raw materials [125] Other Important Information - The company has added 2.8 million new customers in the first half of the year, exceeding 2019 levels [18] - Kingfisher's inventory increase year-on-year was primarily driven by inflation and new store openings, with proactive inventory management strategies in place [48][107] - The company is actively working on energy efficiency initiatives, with over 11,500 energy-saving SKUs available [83][85] Q&A Session Summary Question: On inflation and Screwfix France customer overlap - Management indicated that inflation is being managed effectively, with a strong price index maintained [124] - Regarding Screwfix France, management noted minimal overlap with Brico Dépôt and expressed confidence in the strategy despite potential cannibalization [126]