Key Numbers
Total sales down 1.4% to £10.9bn and up 2.9% on constant currency basis. Adjusted PBT was down 7.5% to £675m.
France sales down 6.6% to £4.1bn, 1% down in constant currency and L4Ls down 2.3%. France retail profit down 11.8% to £349m, down 6.5% in constant currency. UK&I sales up 5.4% to £4.6bn with 3.2% L4L growth. UK retail profit up 16% to £276m. Other international sales were down 4.5% to £2.2bn, up 5% in constant currency and L4L growth was 0.1%. Profit was down 26% to £108m, although there was quite a bit of new country development and core profit was down 7.7% to £139m and up 0.3% on constant currency.
£434m was returned to shareholders (£200m exceptional) in the year.
Analysis
I have watched this from the sidelines for a while. It started looking cheap around the end of last year. We have bounced about 25% since then, helped by some aggressive repurchases, so I think it is worth keeping in touch with this one.
Before we get into the nuts and bolts of the strategic plan, it is worth just highlighting that the UK numbers were pretty good. L4L growth is fairly strong and it looks like the company is benefiting from trends that look set to continue. France is obviously weaker, it isn't clear when this situation will improve. In particular, I suspect that this business has slightly greater trade exposure than the UK division (44% of total French sales) and trade looks very weak.
The new CEO's, Veronique Laury (from Castorama), plan seems to be a reorganization of the business: consolidate purchasing, infrastructure, and processes. In the UK, 60 stores are going to be closed and sub-let vacant space. In Europe, revitalise Big Box programme and extend Screwfix Germany trial.
My first thought, unfortunately, is that this sounds like total rubbish. For one, this isn't a new plan. What is announced is largely a combination of stuff that has been tried before or was already being implemented. The UK store closures are new and should be quite positive, although not in the short-term I suspect, but everything else seems to have been in place with Cheshire.
The other bit of new news was that the B&Q CEO is out. I am not quite sure what to think of this. The business has been under performing for a while so a change is positive but I can't help feeling, based on his short…
