Strategic update Thierry Garnier Chief Executive Officer

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Strategic update Thierry Garnier Chief Executive Officer
Strategic update

Thierry Garnier
Chief Executive Officer

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Strategic update Thierry Garnier Chief Executive Officer
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

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Strategic update Thierry Garnier Chief Executive Officer
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

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Strategic update Thierry Garnier Chief Executive Officer
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

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Strategic update Thierry Garnier Chief Executive Officer
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

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Strategic update Thierry Garnier Chief Executive Officer
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
Strategic update Thierry Garnier Chief Executive Officer
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)

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Strategic update Thierry Garnier Chief Executive Officer
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
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Strategic update Thierry Garnier Chief Executive Officer
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

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Strategic update Thierry Garnier Chief Executive Officer
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

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Screwfix – 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)

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Screwfix – 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

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Castorama 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

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Castorama 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

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Group ‘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

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Group ‘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
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(2)   OEB sales growth excludes services and Russia
Group ‘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

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Group ‘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

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Group ‘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 sales
Group 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                                                                            21
Key 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

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Summary

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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