Thursday 30 May 2002
Unaudited first quarter results for 13 weeks ended 4 May 20022002
£m / 2001
£m / Change
Retail sales / 2,410.8 / 2,260.8 / 6.6%
Like-for-like sales growth / +1.4% / +5.3% / n/a
Retail profit (1) / 114.6 / 91.5 / 25.2%
Stocks(1) / 1,770.7 / 1,628.7 / 8.7%
Capital expenditure(1) / 107.6 / 134.4 / (20.0)%
Net debt / 951.9 / 1,792.6 / (46.9)%
(1) Retail sectors only, excludes e-commerce, property, financial services, acquisition goodwill amortisation, exceptional items and other operating costs (and for 2001 excludes discontinued operations).
Kingfisher starts the year in solid fashion
Kingfisher, the leading European retailer, today announced trading results for the first quarter to 4 May 2002, with retail sales up 6.6% to £2.4 billion. On a like-for-like basis, sales grew by 1.4%. With a firm focus remaining on margin and cost management, retail profit grew by 25.2%.
The Group’s Home Improvement business delivered a strong performance, boosted primarily by UK market leader B&Q. Total UK sales were up 18.9%, with like-for-like sales up 5.9%. In France, total sales grew by 5.6%, with a 2.1% like-for-like increase helped by Castorama’s decision to bring forward its Sspring sales promotion. Home Improvement retail profit was strongly ahead at £101.3 million.
The first quarter is less significant for Kingfisher's Electrical & Furniture business, accounting for around 5% of annual retail profit. Sales declined by 5.0% on a like-for-like basis, with market conditions in continental Europe continuing to be particularly challenging. Retail profit of £13.3 million was 23.1% higher. However, after adjusting for the additional month of sales and losses in last year’s German result, total Electrical & Furniture sales declined by 1.7% and there was a slight fall in retail profit.
“Overall, we've made a good start to the year, although results for individual businesses have varied," said Group Chief Executive Sir Geoffrey Mulcahy. "B&Q has again led the way with a very strong performance. Although economic conditions remain difficult, especially in continental Europe, we consider that prospects for the Group as a whole for the current financial year are satisfactory.”
Update on strategic transformation
The Board believes that the Commandités A are continuing their attempt to frustrate the proposed bid for the minority interests in CDI using a variety of tactics. These include a legal challenge to the independence of Schroder Salomon Smith Barney, a bank which the Commandités A originally selected, after a two week period, from separate shortlists prepared by Kingfisher and the Commandités A. Schroder Salomon Smith Barney, whose appointment had previously been ratified by the Tribunal de Commerce in Paris, has publicly confirmed its independence. Kingfisher, which is firmly committed to moving the process forward, is concerned that the Commandités A continue to frustrate the implementation of the offer process. As the CommanditésA are making no attempt to progress the appointment of the bank required by Article 21 of CDI’s statuts, Kingfisher will vigorously argue its case at a hearing at 11am (Paris time) tomorrow, in the Commercial Court in Paris.Francis Mackay, Chairman, commented: “The Commandités A are putting forward an alternative idea whereby Kingfisher would demerge Castorama through a complex dual listed company structure (DLC). Kingfisher has previously evaluated this concept in depth and has concluded that it is not in the interests of either Kingfisher’s or CDI’s shareholders. Among other things, these transitional structures typically result in a valuation discount because of the market’s lack of appetite for them. Also, the implementation of a demerger of the DIY business would result in Kingfisher dissipating the premium which it paid in the 1998 merger. It would also replace, effectively, the current complex co-control structure with another complex co-control structure. This is not what the Group needs to implement its unified and ambitious strategy. Furthermore, Castorama shareholders would not benefit from Kingfisher’s cash offer which includes a further premium of 20% based on the share price prior to the most recent speculation.
“We’re determined to succeed in our ambition of strengthening further the leading position Kingfisher has built in European home improvement retailing. Reinvigorating Castorama’s French operation is critical to that ambition. The brand and the people working in the business have tremendous potential. To realise that potential for the benefit of shareholders, customers and employees alike, the Board believes it’s extremely important that a clear, unified management structure be created and implemented rapidly. To achieve this, CDI’s minority shareholders must be given the opportunity to consider Kingfisher’s proposed bid as soon as possible.”
-ends-
Note to Editors
This news release contains forward-looking statements based on current assumptions and forecasts made by Kingfisher’s management. Various known and unknown risks, uncertainties and other factors could lead to substantial differences between the actual future results, financial situation, development or performance of the Group and the estimates given here. The Group accepts no obligation to continue to report or update these forward-looking statements, or adjust them to future events or developments.
Company profile
1. Kingfisher is Europe’s leading home improvement retailer, and is ranked number three in the world. The company operates more than 580 home improvement stores in 11 countries, and enjoys market-leading positions in the UK, France and Taiwan. Sales for the Home Improvement sector for the year to 2 February 2002 were more than £5.8 billion, with retail profit in excess of £430 million.
2. Kingfisher Electrical & Furniture operates more than 820 stores in nine countries. It is Europe’s third largest electricals retailing business by sales and number two by retail profit. As well as holding the leading position in France and the number two position in the UK, Kingfisher also enjoys leading positions in Belgium and in the Czech and Slovak Republics. Sales for the year to 2 February 2002 were more than £3.7 billion, with retail profit of £184 million.
Further Enquiries:
Broker and Institutional Enquiries
Ian Harding, Director of Investor Relations / +44 (0) 20 7725 4889
Media Enquiries
Andrew Mills, Director of Corporate Affairs / +44 (0) 20 7725 5776
Jonathan Miller, Head of Corporate Communications, UK / +44 (0) 20 7725 5713
France
Graham Fairbank, Head of Corporate Communications / +33 (0) 1 43 18 52 26
Kingfisher plc / +44 (0) 20 7724 7749
Kingfisher Website / www.kingfisher.com
The Maitland Consultancy
Angus Maitland/Duncan Campbell-Smith / +44 (0) 20 7379 5151
Euro RSCG
Laurent Wormser
Marie-Noelle Brouaux / +33 (0) 1 41 34 40 70
+33 (0) 1 41 34 34 73
SUMMARY UNAUDITED RESULTS
For 13 weeks ended 4 May 2002
Retail sales (£m)2002 / 2001 / % total
change / % like-for-like change
HOME IMPROVEMENT / 1,599.8 / 1,383.4 / 15.6 / 5.0
ELECTRICAL &
FURNITURE(2) / 811.0 / 877.4 / (7.6) / (5.0)
TOTAL / 2,410.8 / 2,260.8 / 6.6 / 1.4
Retail profit (£m) (1)
2002 / 2001 / %
change
HOME IMPROVEMENT / 101.3 / 80.7 / 25.5
ELECTRICAL &
FURNITURE (2) / 13.3 / 10.8 / 23.1
TOTAL / 114.6 / 91.5 / 25.2
(1) Retail sectors only, excluding e-commerce, property, financial services, acquisition goodwill amortisation and other operating costs.
(2) Electrical & Furniture includes ProMarkt for the three months to April 2002 and the four months to April 2001 respectively. The prior year results for ProMarkt include sales of £52.0 million and a retail loss of £(5.0) million relating to the additional month of January 2001.
SUMMARY OTHER DATA
Store nos. / Selling space(000s sq. m.) / Employees
(FTE)
2002 / 2001 / 2002 / 2001 / 2002 / 2001
HOME IMPROVEMENT / 583 / 540 / 3,887.3 / 3,324.5 / 52,897 / 45,802
ELECTRICAL & FURNITURE / 825 / 805 / 1,041.8 / 953.8 / 26,052 / 24,895
TOTAL / 1,408 / 1,345 / 4,929.1 / 4,278.3 / 78,949 / 70,697
HOME IMPROVEMENT
Sales £m
2002 2001 / %total change / % like-for-like
change
UK / 945.6 / 795.0 / 18.9 / 5.9
France / 463.1 / 438.6 / 5.6 / 2.1
Other / 191.1 / 149.8 / 27.6 / 8.6
Total / 1,599.8 / 1,383.4 / 15.6 / 5.0
Retail Profit £m
2002 2001 / %
change
UK / 70.7 / 56.4 / 25.4
France / 26.6 / 28.7 / (7.3)
Other / 4.0 / (4.4) / n/a
Total / 101.3 / 80.7 / 25.5
Store nos.
2002 2001 / Selling space
(000s sq.m.)
2002 2001
UK / 317 / 302 / 1,896.0 / 1,618.0
France / 152 / 142 / 1,184.0 / 1,092.0
Other / 114 / 96 / 807.3 / 614.5
Total / 583 / 540 / 3,887.3 / 3,324.5
UK
During the first quarter of the year, B&Q capitalised on the seasonal opportunities presented by better weather and an earlier Easter than last year. Sales of outdoor categories such as garden equipment, furniture, bedding plants and decking were particularly strong.
Continuing benefits from the Cost Price Reduction Programme helped to improve gross margins in the period and retail profit grew significantly by 25.4% to £70.7 million.
A further six B&Q Warehouses were opened in the first quarter, including the innovative two-storey B&Q Warehouse at Sutton and the first B&Q Warehouse in Eire.
France
Sales in France were boosted by Brico Dépôt’s continuing strong growth, in local currency terms, of 29.2%. Castorama France’s decision to bring forward its Spring sales promotion from May to April led to like-for-like sales growth of 11% in that month. Overall, sales for the quarter in Castorama France grew by 2.9% in local currency.
Four new stores opened, of which two were relocations, bringing the total number of Castorama stores in France to 106. A further three stores are planned to open this year. Three Brico Dépôt stores opened, bringing the total to 46, and a further eight are planned to open in the remainder of the year.
This store development activity resulted in an increase of £2.6 million in pre-opening net costs that contributed to the retail profit decrease of 7.3%. Again, Brico Dépôt achieved strong retail profit growth.
Other
International sales increased by 27.6% to £191.1 million and the result improved by £8.4 million to a retail profit figure of £4.0 million. Sales grew in all regions, except Belgium and Brazil, with good growth in Poland and encouraging performance in Canada against a poor first quarter last year due to difficult market conditions.
ELECTRICAL & FURNITURE
2002 2001 / %
total change / % like-for-like change
France
/ 371.5 / 371.1 / 0.1 / (4.0)UK / 277.7 / 272.8 / 1.8 / (2.4)
Germany (1) / 114.4 / 192.1 / (40.4) / (14.3)
Other / 47.4 / 41.4 / 14.5 / 0.5
Total
/ 811.0 / 877.4 / (7.6) / (5.0)Retail Profit £m
2002 2001 / %
change
France / 26.2 / 27.7 / (5.4)
UK / 0.7 / 0.6 / 16.7
Germany (1) / (10.3) / (13.4) / n/a
Other / (3.3) / (4.1) / n/a
Total
/ 13.3 / 10.8 / 23.1Store nos.
2002 2001 / Selling space
(000s sq.m.)
2002 2001
France (2) / 278 / 260 / 489.4 / 441.5
UK / 258 / 259 / 233.3 / 220.1
Germany / 189 / 194 / 229.0 / 220.0
Other / 100 / 92 / 90.1 / 72.2
Total / 825 / 805 / 1,041.8 / 953.8
(1) / Electrical & Furniture Germany includes ProMarkt for the three months to April 2002 and the four months to April 2001 respectively. The prior year results include sales of £52.0 million and a retail loss of £(5.0) million relating to the additional month of January 2001.
(2) / Electrical & Furniture France includes only those stores consolidated in the Group’s figures. Electrical & Furniture France also operates 141 non-consolidated franchise stores with 355,500 square metres of selling space and 3,600 (FTE) employees.
France
Consumer confidence in France continued to have an adverse impact on the electricals market, which according to GFK saw a 4.4 % decline in February and March. Against that background, Darty saw its total sales decrease by 2.3% in local currency, down 4.1% on a like-for-like basis.
Strong sales growth continued to be achieved in wide screen TVs, DVDs and laptop computers and Darty also continued its programme of space expansion with the opening of a further three stores.
BUT experienced a similar impact from the weaker French market and, while total sales grew by 17.3% in local currency, like-for-like sales declined by 3.5%. Sales in furniture were stronger than in electricals which, coupled with the benefits derived from BUT’s ongoing supply chain initiatives, led to improved gross margins.
UK
Following a year of strong growth in 2001, the UK electricals market showed little growth in the first quarter. Comet’s sales continue to be fuelled by demand for new technology products, including wide screen TVs, refrigeration, multi-media and games.
Comet now operates 36 'interactive' destination stores, following the opening of another five this quarter. Six more are planned to open during the remainder of the year.
Germany
The decline of the electricals market in Germany accelerated in the first quarter and, consequently, sales continued to fall at ProMarkt.
The new management team continued implementing the turnaround plan. The gross margin percentage grew and costs fell compared with last year. However, the extent of the sales decline, due to the difficult market conditions, meant these improvements were insufficient to continue the recent underlying trend of decreasing losses.
Other
This includes Vanden Borre in Belgium, BCC in the Netherlands and Datart in the Czech and Slovak republics. Sales and profit performance improved year-on-year, driven mostly by improvements at BCC following the rectification of last year’s supply chain problems.
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