Strategic update Thierry Garnier Chief Executive Officer
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Strategic update
Thierry Garnier
Chief Executive Officer
1
Key messages
The home improvement market is attractive and
resilient, with supportive new longer-term drivers
Market trends offer us opportunities
We are emerging from the COVID crisis stronger
We are making progress fixing issues from previous years
Our new strategy is delivering – empowered banners
supported by the Group’s scale, strength and expertise
Clear financial priorities and drivers
2
Attractive market with new longer-term industry support
Market growth supported by structural drivers
Provides relatively high margins vs. other retail industries
Resilient against e-commerce pureplay competitors
Proven to be robust through economic downturns
COVID has established new longer-term industry support
More working Home as a New generation Desire for
from home ‘hub’ & nest of DIY’ers increased comfort
emerging and wellness
3
Market trends offer us opportunities
Online with stores Smaller Discounters and value
at the centre formats for money
Medium Rapid and Medium Gradual Medium Gradual
term shift accelerating term shift term shift
COVID Massive COVID Rising COVID Favours
impact surge impact impact discounters
‘Do It For Me’ Responsible
and services Business
Medium Gradual Medium Gradual
term shift term shift
COVID Resurgence COVID Accelerated
impact of DIY impact
4
Our strategic direction and key strengths
Our strategic direction
Kingfisher banners are not A clear vision to build We will ‘power’ these Simpler
the same. This is a strength customer propositions banners as a Group and leaner
Positioned for growth
Access to attractive Top 2 position in all Collective buying scale
c.80,000 skilled and & successful own
markets, with key markets (#1 in
engaged colleagues exclusive brands
favourable drivers UK, Poland, Turkey)
(44% of total sales)
Diverse banners
Industry-leading Strong e-commerce
covering general
c.1,390 stores Responsible sales growth and
home improvement,
Business practices penetration of 18%
trade and discounting
5
We are emerging from the COVID crisis stronger
Roll-out of company strategy Improved banner awareness
fully on track and brand reputation
No delay in our plans from COVID Clear reconnection with our DIY brands
― ―
Focus on speed, agility and ‘done is better than perfect’ Strong new customer growth and step change in digital adoption
Acceleration of e-commerce Greater conviction in costs and
progress by at least two years inventory reduction
Rapidly implemented changes to manage high demand Effective cost reduction actions during the crisis
― ―
E-commerce sales +158%; 18% penetration (FY 19/20: 8%) Average net stock days down c.10%
Leading with Responsible
Stronger balance sheet
Business agenda
‘Doing the right thing’ by colleagues, customer & communities
Net leverage of 0.9x (including leases)
―
―
Repaid over £1.1bn of government-supported debt and
Access to over £2.2bn in total liquidity (as at 18 March 2021)
foregone c.£150m of furlough and business rates relief(1)
(1) Includes £125m of business rates relief foregone in the UK and Republic of Ireland for the tax year 2020/21 (£105m in FY 20/21 and £20m in FY 21/22) 6
We are making progress fixing issues from previous years
Build the New trading
1 new team 3 Focus 4 approach
Group Executive Significantly reduced non-critical Reintroduction of local ranges
team strengthened range reviews ―
― ― More trading events
Key teams reinforced Paused large, ―
at banners time-consuming projects Targeted price investments
―
Rebalance Paused SAP roll-out in Brico Fix
2 local vs. Group Dépôt France 5 France
―
Completed fundamental Completed SAP roll-out in Reigniting ‘discounter DNA’ at
reorganisation of commercial Castorama France, Poland Brico Dépôt
operating model and Romania ―
― ― Significant improvement in IT and
Implementing new IT & digital Exited Russia supply chain operations
operating model, and Group ― ―
‘Centres of Excellence’ Retained Iberia Good progress in rebuild of range –
still much to do (mainly Castorama)
7
Clear strategy and actions to drive share growth
Our retail banners address diverse
The role of the Group is to enable our banners to
customer needs, operate different models
serve their customers better
and have a clear positioning and plan
Test compact store
Grow
concepts and adapt
e-commerce sales
our store footprint
Powered by Differentiate and grow Lead the industry in
through own exclusive Responsible
brands (OEB) Business practices
Build a mobile-first and Source and buy better,
service orientated reduce costs and
customer experience same-store inventory
As a result we are seeing clear improvements in our competitive position
8
B&Q and TradePoint – revitalised and well positioned
Operating Managed unprecedented demand levels;
Overall improvement of stock quality
Proof points
Drivers
Group digital technology stack implemented; LFL sales +13.0% and
E-commerce Implemented next day delivery from store (98% UK population); strong market share gains
Trialling click & collect (C&C) lockers
TradePoint sales +c.11%
Range New OEB and local brands performing strongly (c.19% of B&Q sales)
Strong customer growth
Strong customer growth and step change in digital adoption; (+21%) and online
Customers customers +168%
Significant improvement of store customer NPS
E-commerce sales +117%;
Maintained price index significantly below competitors; 10% of sales (+5ppts)
Trading
Targeted and localised trading events
Launched kitchens remote selling; Relaunched kitchen 88% of online orders picked
Mobile-first in store (+39ppts)
installations in all UK mainland stores;
and services
Speedy Hire (tool hire) concessions in TradePoint
56 ‘digital hub’ stores
Stores and Testing two new compact formats (Merton, Twickenham);
expansion Trialling concessions at ASDA; Opened two medium boxes
9
B&Q and TradePoint – 2021 focus areas
Continued rebuild of availability ahead
of peak trading periods
Increase available range for online orders;
Develop innovative last-mile delivery
Further improve and broaden choice through
brands and OEB
Relaunch TradePoint;
Launch NeedHelp in B&Q
Test compact stores and big-box rightsizing
10Screwfix – positioned for next stage of growth
Operating Managed significant changes to operating model during first
lockdown to operate ~100% online with COVID-secure C&C
Proof points
Drivers
LFL sales +6.6%
Expanded capacity to service extraordinary increase in and strengthened
E-commerce
website traffic competitive position
11m customers in 2020 –
Range Strong focus on OEB ranges 1 in 5 of UK adult population
Strong customer growth
Customers Step change in customer growth (+16%) and online
customers +146%
Improved and held price index below closest competitors; 38 new stores in UK and ROI
Trading
Targeted and localised trading events
– now at 722 in total
Mobile-first E-commerce sales +165%;
>60% of e-commerce transactions from mobile in FY 20/21 78% of sales (+45ppts)
and services
C&C grew from 22% to 66%
Stores and 30 new stores in the UK and 8 in Republic of Ireland (ROI); of total sales
expansion Trialled ‘ultra-compact’ format (Screwfix ‘Collect’ in London)
11Screwfix – 2021 focus areas
Invest in fulfilment capacity to support growth;
Upgrade IT platform to further enhance proposition
Rapidly roll out new Screwfix app – focused on
convenient ‘mobile-first’ collection and last-mile delivery
Further extensions to core ranges;
More OEB ranges tailored to the pro
Continued targeted price investments
Continue store openings in the UK and accelerate ROI;
Medium-term target of >900 stores in UK & ROI
Commence broader international expansion in H1 21/22
12Castorama France – significant progress ‘repairing’ in 2020
Operating
SAP ‘pain points’ identified and addressed Proof points
Drivers
Group digital technology stack fully implemented; LFL sales +6.2%;
E-commerce Accelerated C&C and ‘delivery from store’ services; outperformed the market
Enhanced C&C ‘drive-thru’
Good progress in rebuild of ranges (brands and OEB);
Significant improvement of
Range store & website customer NPS
New OEB kitchens and lighting ranges implemented
c.5k new SKUs
Strong growth of online customers (+219%); introduced
Customers
Successful introduction of Sunday openings
18 core SAP issues
Trading Reintroduced trading events and localised offers identified and addressed
E-commerce sales +187%;
Mobile-first Launched new website (incl. visual search) & new mobile app; 5% of sales (+3ppts)
and services Strengthened partnership with NeedHelp
Click & collect in 2 hours &
Stores and 6 loss-making stores closed (2 further stores to convert to home delivery with DPD
expansion Brico Dépôt in 2021); Trialling first express format
13Castorama France – 2021 focus areas
Optimise supply chain; Continued rebuild of availability
ahead of peak trading periods
Increase available range for online orders
Range ‘repaired’ by end of 2021;
Further broadening of range through brands and OEB
Focused trading events;
Maintain strong price positioning
Expand installation/‘handyman’ services
Test compact stores and big-box rightsizing
14Group ‘powers’: E-commerce
Progress in 2020 Proof points
New Group digital Digitally- ‘Digital hub’ More C&C E-commerce sales +158%;
technology stack enabled picking model for B&Q Home delivery options 18% of sales (+10ppts)
supporting 500k for all fulfilment to improve home expanded range trialling C&C
orders per week routes (B&Q and delivery efficiency & more last-mile lockers;
Strong improvement in
website customer NPS in the
(B&Q and Castorama (covers 98% of delivery options implemented UK and France over FY 20/21
Castorama France) UK population) ‘drive-thru’ and car
France) park collections
C&C sales +226%; 78% of
e-commerce sales (+16ppts)
Forward Focus Reached over 1.5m orders a
week in summer 2020
89% of online orders picked in
Implementation Roll out of Digitally-enabled Extension of store, ex-Screwfix (+32ppts)
Explore
of new IT/digital Group digital picking for Poland and ranges online
marketplace
operating technology ‘digital hub’ for and faster home C&C – 1 minute at Screwfix,
model
model stack in Poland Castorama France delivery 1 hour at B&Q and Iberia,
2 hours at Brico Dépôt France,
Castorama France and Poland
15Group ‘powers’: Own exclusive brands (OEB)
Clear purpose Growth and
penetration Strong growth of brand awareness in 2020
Drives affordability
― £5.3bn
High functionality, innovation Total OEB sales
and differentiation New commercial operating model driving
―
Supports Responsible Business
+7.5%
Sales growth (2)
44%
of Group sales (1)
greater focus on OEB development,
sourcing and engineering
5 leading own brands deliver 23% of Group sales
Commenced new kitchen range roll-out in
2020, supported by new overall customer
experience. Strong customer satisfaction
Forward Focus
Develop Drive specific Extend the Increase
low-cost, high OEB for ranges to Prioritise key speed to
spec innovative different support choice range reviews market
designs formats
(1) FY 19/20: 44%; previously reported comparable was 39%, updated due to a definitional change
16
(2) OEB sales growth excludes services and RussiaGroup ‘powers’: Mobile-first capabilities and services
Focus areas
Drive a mobile-led online Acquisition of NeedHelp
customer experience services marketplace
Speedy Hire concessions –
trial of new tool and equipment hire outlets within TradePoint
Modernise the in-store experience
56%
Improve our 8 key ‘foundation services’ Mobile accounts for c.56%
of e-commerce orders
Relaunched kitchen installations (‘Local Plus’) in all UK
Roll out enhanced design services mainland B&Q stores
Strengthen our installation capability
Extend NeedHelp services platform Trialling new self-checkout Trialling new 3D tool for kitchen & bathroom design
and ‘Scan & Go’ solutions
17Group ‘powers’: Store formats and footprint evolution
Our beliefs Strategic direction
Stores are a central Our store numbers will increase
driver of our retail and – but average store size
e-commerce business will reduce Six compact store trials in 2020: B&Q express (x2), B&Q shop-in-shop
at ASDA (x2), Casto Solférino (Lille), Screwfix Collect (London)
Medium-box (2-6k sqm) stores We are rebalancing store
are strong formats and perform openings to introduce more
well in existing banners medium-box stores
We have some over-spaced We will test & deliver
‘big-box’ stores (>8k sqm) in rightsizings at B&Q and
the UK and France Castorama France c.30% space reduction achieved Two medium boxes opened at
at B&Q Canterbury – March 2021 B&Q and one in Poland in 2020
Compact stores (Group ‘powers’: Responsible Business
We are becoming a more We will be ‘forest positive’ and help
inclusive company tackle climate change
27% reduction in Scope 1 and 2 emissions
‘Doing the right thing’ during COVID since FY 16/17
Local and Group diversity & inclusion plans Now committed to deliver on 1.5°C climate
targets to 2025 (pending SBTi approval)
Launched Group-wide share
ownership plan Colleagues Planet Partnership with Rainforest Alliance
We help make greener, healthier
We will fight to fix bad housing
homes affordable
Focus on ‘sustainable home’ OEB Strong support for local communities and
product development healthcare authorities during COVID
c.40% of total Group sales now from New B&Q Foundation and Shelter
sustainable products partnership targeting to raise >£1m in 2021
Supporting government initiatives Customers Communities New Foundations successfully launched
around greener homes in France, Poland and Romania
19Group ‘powers’: Costs & same-store inventory reduction
Sourcing ‘Same-store’
Cost programme
and buying inventory reduction
Plan to drive cost
Improve store Strategic partnerships Build on significant
and same-store productivity with top brands planning and forecasting
inventory ― ― improvements
reduction well GNFR & shared services OEB sourcing ―
under way; ― and engineering Optimise routes
Reduce dual-running improvements to market
COVID crisis costs of Group/banners
has reinforced ― ― ―
Supply chain efficiencies Manage clearance Reduce slow-moving and
opportunities levels efficiently delisted product stock
―
IT cost optimisation
―
Lease renegotiations
Average net
FY 20/21 Contribution to 30bps Contribution to stable
stock days reduction
proof points reduction in CTS %(1) gross margin %
of c.10%
(1) Movement in costs-to-sales ratio in constant currency. Costs-to-sales ratio defined as Group operating costs 20
(excluding depreciation and amortisation, share of JV interest & tax, and non-recurring net cost savings of c.£85m in FY 20/21) divided by total Group salesGroup financial priorities
1 2 3
Aim to grow adjusted
Prioritise top line growth PBT in line with sales(1) Generate strong free
and grow sales ahead + cash flow to underpin
of market gradually faster than sales shareholder returns
over time
Clear strategy and actions to drive Focused on driving scale benefits Inventory self-help and capex
market share growth and cost self-help discipline (capex c.3.0-3.5% of sales)
― ― ―
Focused on store and website Enabling us to accelerate Progressive, sustainable dividend
customer satisfaction investment in top line growth policy (cover 2.25-2.75x)
― ―
Attractive market with new longer- Committed to efficient capital
term industry support structure while maintaining prudent
position in times of uncertainty
(1) Group total sales growth and adjusted PBT growth in constant currency 21Key drivers
1 2 3
E-commerce
OEB sales New compact
sales growth
growth stores
& penetration
Grow OEB sales,
Grow our e-commerce Test and roll out
providing differentiation,
business and lead compact stores across
value for money,
the industry our markets
and margin
4 5 6
Costs & same-
‘Big-box’ Responsible
store inventory
rightsizings Business
reduction
Starting with tests Opportunity for ‘Forest positive’
at B&Q and self-help and to and helping to limit
Castorama France reverse inefficiencies global warming to 1.5°C
22Summary
The home improvement market is attractive and
resilient, with supportive new longer-term drivers
Market trends offer us opportunities
We are emerging from the COVID crisis stronger
We are making progress fixing issues from previous years
Our new strategy is delivering – empowered banners
supported by the Group’s scale, strength and expertise
Clear financial priorities and drivers
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