Kingfisher today showed the effect of Covid-19 lockdowns on its businesses. In the UK, B&Q second-quarter sales fell by 22.1% but Screwfix sales fell by only 0.1%. Online sales grew by as much as fourfold from mid-March - but overall sales remained down.
Kingfisher said in a second quarter trading update that sales in its second quarter – to April 30 – were down by 24% in total compared to the same time last year, or by 24.8% on a like-for-like basis that strips out the effect of store openings and closures. Sales came in at £2.2bn across the group, with its UK and Ireland business reporting sales of £1.1bn, down by 14.7% on last year. Within that, B&Q sales were down by 22.1%, at £663m, but Screwfix sales were less badly affected, falling by 0.1% to £432m.
Sales in Kingfisher’s French business fell by 41.5% to £596m, with substantial sales falls at both Castorama (-43.6% to £300m) and Brico Dépôt. Sales were also down in its Iberian (-46.8%), Polish and Russian (both -7.6%) businesses, but rose by 10.6% in Romania.
The retail group said that second-quarter sales had been on track until March 14, following operational improvements in France and a new trading approach across the group. After that, Covid-19 disruption, including store closures, caused a “significant impact”. Online sales grew as strongly as four-fold from mid-March – when stores closed – and stores started to reopen in phases in the UK and France from the second half of April. Group-wide online sales peaked at +307% LFL in the fourth week of April, compared to the same time last year.
As stores reopened, sales improved: group LFL sales were down by 74% in the first week of April but were up by 2.7% in the first week of May. As of May 8, the retail group said, it had access to more than £2bn of liquidity. About half of its staff were furloughed though this number is now reducing “singnificantly” as stores reopen in the UK and France.
What is the picture in the UK?
B&Q and Screwfix stores are among the essential stores that were permitted to stay open, but the retail group closed all its stores on March 23, when UK lockdown was introduced, until it was sure it could reopen safely.
The following day, Screwfix and B&Q stores both started to introduce, progressively, contactless click and collect, alongside home delivery. On April 17, 14 B&Q stores were reopened with social distancing measures in place. Those measures include providing staff with gloves, visors and masks, limiting customer numbers in stores, and holding customers in a distanced queue before they enter. Within the stores there are regular santitiser stations, navigation marked on the floor, perspex screens at checkouts and contactless or card payments only. Since then shops have reopened steadily and now 288 of 289 B&Q stores are open. All of its 683 Screwfix shops are selling only via contactless click and collect and home delivery.
In the UK and Ireland, sales fell by their sharpest rates in the first week of April (-70.3% LFL on a year earlier) before starting to recover in the fourth (-23.9%) and fifth (-1.6%) weeks of April and the first week of May (+18.9%). Kingfisher says that demand started to improve in the fourth week as demand increased via contactless click and collect and as some B&Q stores opened towards the end of the week. That’s around the time that many B&Q customers were meeting with hour long queue times on its websites. At the time of writing there is no queue to shop online. The retailer has now moved many of its rents to monthly payments rather than quarterly-in-advance.
And in Kingfisher’s other markets?
In Ireland, eight B&Q and five Screwfix shops have been closed since March 28 and are not eligible to reopen. Lockdown restrictions are now being looked at. Screwfix is offering a home delivery service from stores.
In France, Kingfisher’s 220 stores were allowed to remain open, categorised as essential. All stores were closed to customers from March 15 but a contactless drive through click and collect was gradually introduced from March 23 alongside home deliveries. Home delivery from stores reopened from the third week of April, and stores started to open on April 24. Now all 99 Castorama stores and 121 Brico Dépôt stores are open under the same strict social distancing as in the UK.
Its 81 Polish stores, its 35 Romanian stores and its three Portuguese stores have remained open with strict social distancing.
In Spain, all 28 stores have been closed since the state of emergency was declared on March 14 and could reopen from late May. The retailer sells via home delivery, restarted in late March, and a click and collect services for tradespeople that was launched in late April.
In Russia, 14 out of 18 stores are closed for browsing and buying, with one open and three partly reopened. Contactless click and collect is available in 14 shops, while home delivery is available from all stores.
It’s worth noting that in Romania, where stores remained open, sales fell in most weeks, peaking at a fall of 48.6% LFL YOY in the first week of April, before starting to recover in the fourth week of April (-5.3%) and moving back into positive territory in the fifth week of April (+42.4%) and first week of May (+16%).
Kingfisher chief executive Thierry Garnier said: “Having initially closed our stores in France and the UK, we have rapidly adapted how we operate to meet the essential needs of our customers safely during lockdown. We started by transforming our operations to meet a material increase in online transactions through our click and collect and home delivery services. We reconfigured our retail space and processes, allowing a phased and safe reopening of stores whilst preserving the social distancing and other health and safety protocols that are likely to be with us for some time. In addition, we have donated over £1 million of PPE to frontline health workers, with more on the way.
"We have also taken significant actions throughout the business to reduce costs and protect cash, in part supported by governments. Our current cash balance provides us with sufficient financial headroom based on assumptions of a prolonged period of reduced sales. Over and above this we have put in place some further liquidity arrangements, including support from the UK and French governments, which give us additional security in case of even more severe scenarios.”
Board members and the group executive team are forgoing 20% of their base salaries or fees and the chief executive and chief financial officer will not receive bonuses for the year.
Image courtesy of B&Q