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Preliminary results for the year ended 28 January 2012

 

22 March 2012

 

UK & IRELAND

Sales £m 2011/12 2010/11 % Reported Change % Constant Change % LFL
Change
UK & Ireland 4,338 4,333 0.1% 0.1% (1.4)%
Retail profit £m 2011/12 2010/11 % Reported Change % Constant Change
UK & Ireland comprises B&Q in the UK & Ireland and Screwfix
All trading commentary below is in constant currencies
UK & Ireland 271 243 11.6% 11.6%

Kingfisher UK & Ireland

Total sales grew by 0.1% to £4.3 billion (-1.4% LFL) in a continuing challenging consumer environment which saw Focus DIY, the UK's fourth largest DIY operator with 177 stores, close during the year. Retail profit grew by 11.6% benefiting from continued gross margin and cost initiatives.

GfK market data for the UK's leading home improvement retailers(1) was down around 3% across the year whereas the trade market(2) declined by 7%.

B&Q UK & Ireland's total sales were down 0.9% (-1.8% LFL) to £3.8 billion with outdoor product sales up around 1% and indoor product sales down around 3%.

The new in-store trade-only 'TradePoint' offer continues to grow and attract new trade professional customers with around 800,000 registered by the end of the year, four times the number previously registered with the B&Q Trade Discount Card. This growing database enables B&Q to identify and directly market to this important customer segment for the first time.

Retail profit grew by 10.9% to £238 million. Gross margin was up 30 basis points against tough comparatives (2010/11: +110 basis points) benefitting from sales of higher margin products and more direct sourcing. A strong focus on operating cost efficiencies also continued with costs (SG&A(3)) percentage to sales held broadly flat across the year despite high general inflation.

During H1 Kingfisher paid £24 million to buy up to 31 leasehold properties from the administrator of Focus DIY. Following regulatory approval and discussions with landlords, 27 reopened in the B&Q format in H2 for a capital cost of around £15 million and are trading well. An additional £11 million exceptional charge was also incurred integrating the stores before they opened.

(Note: of the 177 Focus DIY stores trading before its administration, 29 were subsequently acquired by Kingfisher, 13 by other home improvement businesses and the remaining 135 were closed).

Screwfix grew total sales by 8.2% (+1.9% LFL) to £518 million in a challenging smaller tradesman market(2). Continuing initiatives which helped to drive market share gains included new ranges (e.g. safety and work wear), the addition of specialist trade desks exclusive to plumbers and electricians within Screwfix outlets, and the continued roll out of new outlets.

During H1 Screwfix developed and successfully trialled a smaller format outlet (400 sq m compared with the typical 700 sq m) in order to access smaller or more densely populated urban catchments. As a result, Screwfix accelerated its UK expansion plans beyond the 20 new outlets originally planned at the start of the year. As a result, 53 net new outlets were opened during the year, 42 in the newer, smaller format. Screwfix now operates 215 outlets in total which now account for around two-thirds of total sales.

Retail profit was up 16.2% to £33 million, reflecting the strong sales growth, more direct sourcing, distribution efficiencies and continued tight cost control.

  1. GfK data includes new space added but excludes private retailers e.g. IKEA and smaller independents
  2. Based on the Builders' Merchants Federation lightside trade data Jan-Dec 2011
  3. Selling, General and Administrative Expenses

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