16th Feb 2006 07:01
Kingfisher PLC16 February 2006 EMBARGOED UNTIL 0700 HOURSThursday 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) salesRetail 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'snew management team has acted decisively to support short-term trading, managestocks 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 growthcontinues and we are making good progress with our strategy of strengthening ourposition in major markets, rolling out developing businesses and moving into newhigh growth markets." UK B&Q's reported sales fell 6.1% to £850.3 million (-9.0% LFL). Underlying LFLsales were down 6% before adjustment for sales of kitchens and bathrooms whichwill 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'simmediate and longer-term trading with particular focus on: • Price competitiveness - prices on everyday products continued to belowered and promotions were extended on kitchen and bathroom ranges in a weakJanuary. Pricing initiatives were successful in driving customer traffic andimproving market share. • Range and store development - roll-out of a significantly improvedrange of ceramics and the new range of premium kitchens ('Select') continued inthe quarter. One new Warehouse store opened in Milton Keynes showcasing thelatest display techniques and new ranges. One new mini-Warehouse store wasopened and six existing stores were converted to the mini-Warehouse format. • Service improvement - results from trials of 'Service Squad' wereencouraging and roll-out continued towards the target of 200 stores in 2006. • Cost reduction - benefits from the streamlining of B&Q's corporateoffices started to be realised in the quarter. Promotions stimulated volume sales and reduced stock levels but impacted grossmargins, 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 grossmargin percentage to have fallen by just over 200 basis points. As previously announced, exceptional charges of around £200 million arose in2005/06, of which approximately £65 million is non-cash, due to the programme ofstore rationalisation and the streamlining of B&Q's corporate offices. Inaddition, following a review of its customer credit services, B&Q has givennotice of contract termination to its current supplier. This will result in anexceptional charge in 2005/06, anticipating a repayment of £19 million from theoriginal £149 million proceeds on disposal of Time Retail Finance (Kingfisher'sformer in-house credit business) in 2002. The change will have no net cashimpact and is expected to be beneficial from 2007/08 when new arrangements comeinto effect. A £14 million gain on UK freehold property disposals in the quarterwill also be included in exceptional items. In a stronger Trade market, Screwfix Direct performed well following last year'soperational expansion, with sales up 37.1% to £71.3 million. There was growthin all ranges, in particular bathrooms and power tools. The six new TradeCounter outlets are trading well and 15 more will be opened during 2006. TradeDepot opened its first two branches in the quarter with encouraging earlyresults. *Market data from GfK: B&Q sales before revenue recognition under IFRS. FRANCE French Market - According to Banque de France, comparable DIY store sales growthin France was 0.1% in the three months to January. Kingfisher continued tooutperform 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 demandfor 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 newdecorative and showroom products introduced in the first half of the yearcontinued to improve, supported by major catalogues showcasing the new productranges. 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 wereopened, taking the total to 73. In 2006 a further six smaller Castorama stores will be converted to the BricoDepot format. REST OF EUROPE REST OF EUROPE sales increased 39.8% (+37.9% constant currency) to £213.4million (+18.8% LFL). Castorama Poland sales increased 48.6% (+41.7% constant currency) to £118.6million (+31.1% LFL) against weak comparatives following the introduction ofhigher VAT rates in May 2004. Sales were strong across all categories, boostedby customers purchasing ahead of a 31 December deadline for claiming tax reliefon construction and renovation projects. One new store opened taking the totalto 30. Castorama Italy sales increased 16.3% (+19.0% constant currency) to £65.0million (+5.0% LFL). This strong performance in a challenging market wassupported by new catalogues. Two new stores opened in the quarter, taking thetotal 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. Theprogramme to integrate the 13 stores acquired from OBI in June is proceedingwell, with the first fully revamped conversions to the B&Q format coming onstream at the end of the quarter. The conversion process is expected to becompleted during summer 2006. Enquiries: Ian Harding, Group Communications Director 020 7644 1029Nigel 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 byapplication 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 thirdlargest 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 andneighbouring countries. For the 13 weeks ended 28 January 2006Retail sales £m 2005/6 2004/5 % change % change % (reported) (constant) like-for-like changeB&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/ATotal 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 2006Retail sales £m 2005/6 2004/5 % change (reported) % change % like-for-like (constant) changeB&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/ATotal 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. 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