A testing trading quarter saw Screwfix and B&Q owner Kingfisher sales decline by a quarter (down 24.8% like-for-like), but there were glimmers of hope and signs an adaptive strategy was beginning to pay off.
The group said that it had experienced strong e-commerce growth – up fourfold since mid-March. As observed elsewhere, the increase in e-commerce was not enough to make up for stores closed at the beginning of the lockdown.
Kingfisher decided to close all B&Q and Screwfix stores from 23 March (despite the UK government classing hardware stores as essential), but progressively introduced a contactless click and collect service for customers of those stores, alongside a home delivery service. From 17 April, 14 B&Q stores were opened as a trial.
However, thanks to the phased re-opening of stores in the UK and France in the second half of April (288 B&Q are currently open), Kingfisher saw an improving relative sales trend – group like-for-like sales moved from a significant 74% drop at the start of April to a +2.7% within a month (by first week of May). 683 Screwfix stores are currently operating a contactless click & collect service under strict social distancing and safety measures.
Before Kingfisher felt the impact of Covid-19, Q1 trading continued a previous positive trend seen in Q4 of the previous financial year (‘19/’20) brought about with operational improvements in France and a new trading approach across the Group, including re-introducing trading events.
The tumultuous period saw Kingfisher ringfence PPE stock in March to donate to frontline healthcare workers.
Thierry Garnier, Chief Executive Officer, said: "Since the COVID-19 crisis started, our priorities have been clear - to provide support to the communities we serve, to fulfil our obligations to colleagues as a responsible employer, to our customers as a retailer of essential goods, and to protect our business for the long term.
"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 & 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 & 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. Overall, the operational and financial actions we have taken give us a sound footing in the current crisis and beyond.
"It has been inspiring and humbling for all of us to see how Kingfisher's teams have risen to meet these significant challenges. We have adapted to government guidelines, listened to colleague and customer feedback, and made major changes to our operating model in a matter of days. These challenging times have underscored both the agility of our teams and the importance to customers of our offering, which gives me a lot of confidence for the future."