Kingfisher plc (KGF) Earnings Call Transcript & Summary

I would say, obviously, you know Thierry and Bernard over here. We've also got John Mewett, there we go, his hand up as well, CEO of Screwfix. Welcome, John. So we've got about now 2 minutes left before we kick off the live presentation. Okay. And then just a couple of housekeeping items for you all. So firstly, there's no planned fire alarm test this morning, which is great news. So if we do hear the buzzer, just go. Just ensure your devices, please, are all switched off.

Good morning. Welcome to everyone here in person at the London Stock Exchange and also to those of you joining online. So -- and first of all, on behalf of my colleagues in our Group Executive and our Board, I would like to begin by thanking each of our 80,000 colleagues across the group for their commitment and dedication. They continue to work hard and to deliver in an environment that stays very demanding. We are proud of them and proud to be part of this team. So now turning on to our agenda for today on Slide 3, I will start the presentation with the key highlights and trends from the half, and Bernard will then provide a detailed review of our financial performance and outlook for the year. I will then update you on our operational and strategic progress as well as our priorities for the second half. We'll then be happy to take your questions. So starting off on Slide 4 with the key messages. Like-for-like sales of minus 2.2% were slightly ahead of expectation against the backdrop of unseasonal weather and ongoing macroeconomic challenges in our markets. We delivered an adjusted PBT of GBP 336 million for the half. And by region, U.K. & Ireland sales were better than expected with B&Q and Screwfix both delivering positive like-for-like growth and gaining market share. This was a strong performance given the volatile weather and challenging macro. In France, we saw similar external factors that a 10-year low of consumer confidence impacted market growth. In this environment, Castorama performed well with Brico Dépôt slightly weaker. And in Poland, we faced very strong comparatives throughout H1, but so the trading environment deteriorate in Q2 due to the macro. This led to weaker-than-expected sales and also to some impact on our gross margin. By category, we saw some encouraging trends. Our core and big-ticket categories, which were 78% of our sales, were down by just 1% year-on-year. And crucially, the sales volumes of those categories showed an improving trend through the period. I will come back to the seasonal category sales shortly, but clearly, the weather impacted performance here. On the broader picture, we continue to invest for growth. We'll provide the detail on this later in this presentation. But I'm very pleased with our progress, for example, in e-commerce and marketplace around our use of AI and data, the development of trade proposition and the expansion of Screwfix. So reflecting our H1 performance and the trading environment in our markets, we have updated our full year PBT guidance to GBP 590 million. We remain comfortable with our guidance of over GBP 500 million of free cash flow for the year. And underpinning this confidence, we are announcing today a new GBP 300 million share buyback program starting early next month. We have completed GBP 600 million of buyback and paid GBP 900 million of dividends over the last 4.5 years, demonstrating our commitment to shareholder value. Now turning to Slide 5 and the more detailed highlights. Overall sales were resilient despite the impact on our market from the weather and macro with total sales down 1% and like-for-like sales down 2.2%. In Q2, like-for-like sales were down by 1.2%, showing momentum from the previous quarter. This was largely driven by better U.K. weather conditions in May and June, which helped us recover some of the lost seasonal sales from Q1. Core and big-ticket sales also improved in Q2, and we saw a clear trend of customers switching from outdoor to indoor projects compared to 2022. Like-for-like sales for Q3 to date are minus 2.4%. Again, the trend in Q2, we see continued positive momentum in the U.K. & Ireland, a slight slowdown in France and a small improvement in Poland. E-commerce continued to perform well with sales up 7.1%, reaching 16.8% penetration and up 1.2 points year-on-year. This was supported by ongoing strength in marketplace with B&Q marketplace sales reaching 33% in July as a proportion of its total online sales. We delivered adjusted PBT of GBP 336 million, lower than our guidance of GBP 350 million for the half. U.K. & Ireland and France were slightly ahead of expectations; the latter due to good cost control, but this was more than offset by a lower-than-expected profit from Poland. And I will come back to this shortly. Free cash flow of GBP 346 million was in line with expectations, supported by the unwinding of prior year working capital positions, as previously guided. And finally, we returned more than GBP 260 million to shareholders in H1 through dividends and buybacks. Along with the buyback program announced today, we have also declared an interim dividend of 3.8p, in line with last year. Moving now to Slide 6 and looking at performance by category. 22% of our sales in H1 were from seasonal categories. This includes products such as outdoor furniture, barbecues, but also outdoor paints and fencing. Like-for-like, seasonal sales were down 5.9% in the half. Many of our markets experienced unseasonal weather in H1, especially in March and July in the U.K. and France and June in Poland. While there were some patches of good weather, overall, this was a heavy impact on trading with double-digit declines in sales of seasonal categories in March and July. The important takeaway is that sales and volumes sold for our core product and big-ticket categories have been increasingly resilient, including the benefit from some transference by customer to indoor projects. These trends are encouraging for the second half of the year where the seasonal weighting is lower. Now turning to Slide 7 and a summary of the trading conditions we faced in our main markets. In the U.K. & Ireland, we saw mixed but overall negative indicators on the macroeconomic position and the housing market. Yet, as of now, we continue to see a very resilient customer along with repairs and maintenance, which drives the majority of our sales. We are observing a clear consumer trend of improve, not move, which is supporting robust demand from the trade segment. Like-for-like sales in the U.K. were up 1.7% year-on-year. We have spoken about seasonal weather impact, but most encouragingly, our core and big-ticket sales demonstrated strength, up 2.8% year-on-year and with Q2 sales accelerating from Q1. In France, we saw a macroeconomic environment that remains challenging. But unlike the U.K., consumer confidence is at a 10-year low, impacted by the perception of overall inflation and also by strikes and protests during the period. All these factors adversely affected home improvement market growth in H1. Against that context, we were pleased with the resilient performance of Castorama, again, supported by core and big-ticket sales, and Brico Dépôt was weaker with like-for-like sales down 5%. Its performance was also impacted by the national strikes in Q1, a heavier impact of weather on its seasonal sales and the reallocation of a portion of its marketing budget to digital. This was well intentioned, but ultimately not successful in relation to in-store traffic, and our approach has been corrected since mid-July. The business also saw lower cross-selling from its special arrivage promotions. And finally, in Poland, we are faced -- we faced a very challenging trading environment. For context, it's worth remembering that we had a very strong H1 in Poland last year where like-for-like was plus 29 -- 25.9% and, therefore, trading against strong comparators. However, the environment of high inflation and interest rates has had a big impact on the Polish consumer, resulting in weaker demand for our products in Q2 than we had anticipated. And on Slide 8, I would like to provide more detail on our diagnosis of the performance in Poland and how we are reacting to it. Like-for-like sales were down 10.9% in H1 for the reasons outlined on the previous slide. To calibrate this performance, evening out the high comparative from last year, the 2-year like-for-like of Poland in H1 was plus 12.2%. On market share, as expected, we lost some of the exceptional gains from last year, but our share remains up over a 2-year period. So not a bad performance in this context, but we had expected a better Q2. Our price index remain competitive and is being kept below key peers. Stock availability is above 98%. Our gross margin was 170 basis points lower year-on-year. This was mainly driven by 2 factors, both reflections of the trading environment in H1: first, while we remain disciplined in our promotional activities, customer participation in the normal cadence of our promotions was higher; and second, clearance related to lower sales of specific ranges that has been purchased at a higher cost price. And this latter point also impacted performance in August, but will not recur. And on operating costs, this increased by 9.3% year-on-year driven, as expected, by increases in pay rates and energy costs, new store openings and higher technology spend. New stores contributed around 1/3 of the cost increase. For context, inflation rates in Polish economy were at around 15% for H1. And we also had a one-off charge in Q2 of over GBP 5 million related to ineffective FX hedges from lower stock purchases. Overall, retail profit decreased by 64% year-on-year, lower than we had expected. As a result, we are taking decisive actions on cost. Since the fourth quarter of last year, we have been working hard to align costs according to market conditions. These actions were accelerated from June, which will further benefit us in the second half. And we are securing additional purchase price reductions, further reducing our store staff numbers and incentive levels, lowering discretionary spend and re-phasing certain investments, including opening fewer stores. For example, as of 31st of July, store staff numbers are down 7% year-on-year. We're also planning for a total of 5 new stores this year versus 7 previously. So in H2, the OpEx comparative becomes a little easier with a lower year-on-year impact from staff and energy cost inflation and no further impact expected from ineffective FX charges. Overall, we are clear on what we need to do to navigate through the near-term environment in Poland. Longer term, our conviction remains high on the growth potential of this market and for our banner. We are #1 in the market and the most popular home improvement brand with an outstanding customer proposition. We'll talk later about marketplace and trade, 2 levers of the Kingfisher strategy, which we believe are significant growth drivers for Poland. And we remain confident in the medium-term store opening plan that we discussed in our full year results, targeting up to 80 medium and compact stores over the next 5 years. So now let me hand over to Bernard to take you through the financials in detail.

Thank you, Thierry, and good morning, everyone. To Slide 10 and the key financials for the half year. Total sales in constant currency were down 1% to GBP 6.9 billion, reflecting resilience across both retail and trade channels, particularly in the U.K. & Ireland. Like-for-like sales were down 2.2% with Q2 showing an improvement on Q1. We generated gross profit of GBP 2.5 billion with gross margin down 40 basis points. This movement reflects higher customer participation in promotional activity in France and Poland, higher clearance costs and stock provisions and some impact from our sales mix in Poland. In constant currency, retail profit decreased by 23% to GBP 433 million with retail profit margin down 100 basis -- 180 basis points to 6.3%. While gross profit was up in the U.K., this was more than offset by lower gross profit in other regions. We also saw higher operating costs in the U.K. and Poland, largely due to staff pay rates and energy costs. Adjusted PBT decreased by 28.8% to GBP 336 million. Free cash flow of GBP 346 million was in line with our expectations and supported by the unwind of working capital outflows from the prior year, as previously guided. And our total liquidity position remains strong at over GBP 800 million. Our net debt, which is mainly comprised of lease debt, is just under GBP 2.2 billion with net leverage of 1.6x EBITDA. Moving to Slide 11 and the performance of our major geographies. All year-on-year variances are in constant currency. Starting with the U.K. & Ireland, we delivered good like-for-like growth of 1.7% with the trend accelerating from minus 0.8% in Q1 to plus 4.1% in Q2. This was supported by significant improvement in seasonal sales with more favorable weather in May and June. Space and acquisitions contributed 2.1%, mainly from new store openings at Screwfix and the acquisition in March of Screwfix Spares. Overall sales in the U.K. & Ireland increased by 3.8%. Looking by banner, like-for-like sales at B&Q increased by 1% with sales improving significantly in Q2. Core and big-ticket sales were up 2.7% with an acceleration in Q2 supported by improving volume trends. B&Q also saw strong growth in its e-commerce sales, up 19% year-on-year, driven by marketplace. TradePoint delivered a good performance in the half against robust prior year comparatives. Like-for-like sales were down 1.8% with penetration of B&Q sales reducing slightly to 20%. TradePoint sales were impacted by the proactive decision to switch off instant vouchers during big-ticket promotional events in support of profitability and investments in promotions on the retail side. Despite this change, new TradePoint membership sign-ups increased by 37% year-on-year. At Screwfix, like-for-like increased by 3.1% with growth in all categories and significant market share gains in the half. Space growth and the acquisition of Screwfix Spares contributed circa 6% for total sales growth of 9.2%. U.K. & Ireland gross margin was flat versus last year, reflecting the effective management of inflation and favorable channel mix impacts from the strong growth of B&Q's e-commerce marketplace. This was offset by higher clearance costs and stock provisions. Retail profit decreased by 9.8% to GBP 306 million with an increase in gross profit more than offset by higher operating costs, up 8.9%. This was, for a large part, driven by cost inflation, including increases in staff and energy cost. Higher technology spend and costs associated with 59 new stores also added to the increase. Cost increases were partially offset by reductions achieved as part of our strategic cost reduction program. Turning to France. Like-for-like sales were down 3.8% with trading impacted by a challenging consumer environment and unseasonal weather conditions through the half. As we said in May, our Q1 sales were impacted by national strike action, which resulted in lower footfall to many of our stores, especially at Brico Dépôt. The like-for-like trend improved slightly in Q2, driven by an uplift in seasonal category sales. At Castorama, our like-for-like sales were down 2.7%, which was a resilient performance in light of the environment. Core and big-ticket sales were down 0.9% with positive growth in many key categories. Brico Dépôt like-for-like sales decreased by 5%, as described earlier by Thierry. The gross margin in France decreased by 30 basis points, largely reflecting the higher weighting of sales at Brico towards arrivage together with higher clearance costs. Retail profit decreased by 21.9% to GBP 104 million with 100 basis points decrease in the retail profit margin. Operating costs decreased by 1.5% due to the flexing of variable cost together with cost reductions achieved as part of our strategic cost reduction program. This was substantially offset by wage inflation and by higher energy costs and technology spend. With regards to Poland, Thierry has already covered the drivers of its performance in detail. In Iberia, like-for-like sales decreased by 1.2%. Retail profit of GBP 3 million was half of the prior year number, reflecting lower sales and gross margin and slightly higher operating cost, up 1.7%. Romania sales decreased by 8.4%, reflecting strong prior year comparative. Like-for-like sales were down 4.9% with trends improving in Q2. The retail loss increased to GBP 10 million, primarily reflecting lower sales and gross margin and slightly higher operating cost, up 1%. Other consists of the consolidated results of our new businesses, Screwfix International, NeedHelp and franchise agreements. A combined retail loss of GBP 10 million was realized compared to GBP 30 million in the prior year. The loss was largely driven by Screwfix France as the business invested in the opening of stores. Our Turkish joint venture, Koçtas, contributed a retail profit of GBP 5 million, up GBP 1 million from prior year. However, as I will explain in the next slide, this was more than offset by higher Koçtas-related interest in the half. To Slide 12 and the movement in adjusted PBT for the group. In constant currency, this was down GBP 142 million or 29.7% for the half. Lower like-for-like sales at constant gross margin contributed GBP 55 million to the decline. The lower like-for-like gross margin rate, as already described, contributed a further GBP 25 million to the overall decrease. Staff and energy inflation was GBP 88 million, largely driven by increases in pay rates together with significantly higher energy costs. As a reminder, the year-on-year inflation of pay rates is higher in H1 than H2 due to the timing of pay increases last year. Energy inflation follows a similar cadence this year due to the higher rates last year at which energy exposures were hedged for H1. Other cost inflation and technology spend, which includes depreciation and IT assets, had an impact of GBP 39 million. We realized one-off charges of just under GBP 10 million in relation to the accounting for ineffective foreign exchange hedges. Over GBP 5 million of this related to Poland linked to lower product purchases than we had originally expected. We were able to partially offset these cost increases through flexing our staffing levels and variable costs, together with savings achieved as part of our strategic cost reduction program. And we'll provide a little more detail on this in the next slide. The net increase in operating costs, excluding costs related to new stores and new businesses, was GBP 54 million. The year-on-year movement in profit contribution from our new stores and new businesses was GBP 5 million. This was mainly driven by our new stores at Screwfix in the U.K. & Ireland. And finally, our non-retail profit items were GBP 13 million higher year-on-year. This comprises GBP 10 million higher central costs, which includes the impact of one-off insurance deductibles related to fire and subsidence claims in the U.K. and Poland. In addition, interest and tax related to our Koçtas joint venture was GBP 11 million higher, reflecting accounting adjustment linked to high inflation and interest rates in Turkey. These items were partially offset by GBP 7 million lower net finance cost. On Slide 13, I'd like to cover our management of gross margin and operating cost in a little more detail. We delivered a group gross margin rate that was very slightly lower than our expectation with resilience in the U.K. margin offset by impacts in France and Poland that were largely driven by the trading environment. We maintained competitive price initiatives across our banners either below or close to 100. While we continue the disciplined approach to promotions, we saw higher customer participation in the activities that we run. Together with the impact of higher clearance and stock provisions and sales mix in Poland, our overall gross margin was 40 basis points lower. Looking to the second half of the year, we expect to see a steeper easing of input cost inflation in H2. And we continue to see constructive results from our longer-term cost negotiations with suppliers. Maritime freight costs have also eased significantly, which will be a benefit in H2 and into the first half of next year. Our foreign exchange exposures from U.S. dollar purchases this year are fully hedged. As we said in our full year results, the impact of our hedges remains a headwind this year. Finally, we will continue to maintain our focus on competitive pricing while managing product cost inflation effectively. Turning to OpEx. We achieved GBP 83 million of operating cost reduction in H1, as I've set out on the previous slide. We're continuing to increase staff productivity with the number of FTEs in the group reducing by 2,700 year-on-year, partially offsetting increases in pay rates. While our overall energy costs increased year-on-year, driven by the timing of our hedges, we managed to offset some of this through 12% lower energy consumption. Measures included installing air source heat pumps in Screwfix stores, further rollouts of LED lighting and better controls over store temperatures. We also continue to deliver on our longer-term cost initiatives across the group, including far-sourcing one of our larger call centers. We also leveraged our scale to drive substantial savings in our goods not for resale. This included renegotiating and optimizing spend in IT, advertising and marketing, cleaning, security and facilities management. In addition, range review costs were tightly managed. In H2, we will continue to flex our cost base to align to trading conditions while continuing with our more strategic initiatives. As mentioned, we will benefit from the easing of cost inflation as we annualize pay increases given in H2 last year and also as our energy hedges start to roll off. Finally, we are taking a disciplined and more pragmatic approach to our investments, for example, by re-phasing the timing of certain range reviews along with our planned store openings in Poland and Screwfix France. To Slide 14 and the summary of cash flow movements during the half. We generated EBITDA of GBP 712 million. There was a working capital inflow of GBP 84 million driven by a net increase in payables of GBP 173 million, partially offset by an increase in inventory of GBP 89 million. The increase in inventory reflects typical inventory growth at the half year stage versus the year-end. I will comment on our inventory management in more detail on the next slide. The increase in payables was as expected, reflecting more normalized purchasing patterns compared to prior periods. Capital expenditure in the half was GBP 164 million, and free cash flow was GBP 346 million. We continue to expect more than GBP 500 million of free cash flow for the year, supported by the continued unwind of prior year working capital positions. Dividends of GBP 165 million were paid in relation to the final dividend for full year '22/'23, and a further GBP 99 million was returned to shareholders via our previous buyback program. Overall, this resulted in a net cash increase of GBP 51 million. Turning to Slide 15 and a little more detail on inventory management. Our net inventory was 2% lower year-on-year despite lower-than-expected seasonal sales in H1. The impact of inflation was more than offset by our strategic reduction initiatives and lower purchasing. Inventory in volume is 11% lower year-on-year. All categories, excluding seasonal, are reducing in line with our expectation, and we achieved this while improving product availability to the highest levels seen since before the pandemic. Our AI-powered supply chain visibility tool, which provides our banner with real-time and end-to-end visibility of products from factory to store, is now live in France, Iberia and Romania. And we are already seeing early evidence of this improving availability and forecasting, which in turn drives shorter lead times and better inventory turn. We expect to roll out this solution to all remaining banners in H2. Overall, we are on track to reduce inventory this year, and we see a significant multiyear opportunity from a structural reduction of inventory levels. Moving to Slide 16 and our current liquidity and financial position. As of the 31st of July, we had over GBP 800 million in total liquidity available, including GBP 317 million of cash and an undrawn credit facility of GBP 550 million. As a reminder, the facility is linked to sustainability and community-based targets with most of it expiring in May 2026. Our financial debt consists of 2 fixed term loans totaling GBP 100 million, which were taken out in H2 last year to top up our liquidity and help manage our working capital cycle. Net leverage was 1.6x EBITDA as of the 31st of July, below our maximum threshold of 2x. To Slide 17 and a reminder of the simplicity and consistency of our approach to capital allocation. Our first priority is reinvestment in the business to support profitable long-term growth. Our target gross CapEx is 3% to 3.5% of sales per year to drive our organic growth. Our aim is to grow dividends progressively over time, and our target dividend cover range remains at 2.25x to 2.75x based on adjusted earnings per share. We may move outside of this target range from time to time, and it's likely that we'll do so this financial year. And we have a clear track record of returning surplus capital to shareholders. We completed our second GBP 300 million buyback program last month. We have returned over GBP 1.5 billion of capital to shareholders since full year '19/'20 while keeping leverage below our maximum threshold of 2x EBITDA. We are pleased to announce today that in addition to the interim dividend, which we are holding flat at 3.8p, we will buy back a further GBP 300 million of our shares starting from early next month. Finally, moving to Slide 18 and our outlook and guidance for the full year. For the technical guidance, it can be found in the appendices on Slide 34. Like-for-like sales for the third quarter to date are down 2.4%. Compared to our sales trend in Q2, we are seeing continued positive momentum in the U.K. & Ireland with good demand from DIY and do-it-for-me trade customers and improved weather since mid-August. This is supporting growth in both core and big-ticket and seasonal category sales. In France, we have seen a slight slowdown in the sales trend, reflecting continued weak consumer sentiment in the country. And in Poland, we have seen a small improvement in the sales trend relative to Q2. Core and big-ticket category volumes for the group show continued improvement in the year-over-year trend versus Q1 and Q2. More broadly, for H2, we will maintain disciplined trading and competitive price initiatives in all of our banners. We further expect an easing of year-on-year inflation related to COGS, staff and energy costs. You can also expect from us a continued focus on managing our operating costs in accordance with demand levels. Finally, to reflect our H1 performance and the trading environment in our markets, we are updating our full year adjusted PBT guidance to circa GBP 590 million. We remain confident in generating more than GBP 500 million of free cash flow for the year, which is reflected in our new gbp 300 million share buyback program. With my review completed, let me now hand back over to Thierry.

Thank you, Bernard. So now moving to an update on our operation and strategic progress, and I would like to start on Slide 20 by sharing some results from our recent surveys of retail and trade customers. We conduct regular and extensive surveys in the U.K., France and Poland, allowing us to check the pulse of our markets. Overall, comparing to our results in April, we saw improvements on forward indicators of consumer sentiment and home improvement activity and an increased uptake in repairs and maintenance work, which is supportive for the pipeline of trade people. In all our key markets, the percentage of consumers who believe their personal finances will get worse in the next year has gone down. This is encouraging, especially in Poland, but we know that French consumers remain the least confident of the 3 markets. This improving indicator translates into an increase in the number of consumers who intend to do more DIY to improve their homes in the next 12 months, particularly in the U.K. Underpinning this, we believe, is a stabilization of macroeconomic indicators and personal finances as well as supportive industry trends, including energy and water efficiency and a now stable trend of more working from home. The surveys also show a notable increase in maintenance and repair projects completed in the last 12 months and as well a higher intention to take up this type of home improvement activity. We see this in our home sales this year with more consumers improving, not moving, to maintain and protect the value of their homes. We also see this trend supporting robust demand from the trade segment. Our surveys show that 93% of trade people in the U.K. are working, which compares to 91% in March. 80% have more work in the pipeline, which has been stable for many months, and 83% of tradespeople are just as busy or busier than this time last year. So overall, we are encouraged by the behaviors and forward intentions that we have seen in these survey results. Now to Slide 21. Our resilience in the fast-moving and often challenging environment reflects the strong foundations of the Kingfisher Group. We are a well-balanced business with diverse banners across a broad geographic presence. And within most of these markets, we hold the first or second market position. We maintain a balanced exposure to DIY and DIFM trade customers and a very high retention of new customer spend. Over half of our sales remain linked to essential repairs and maintenance. And in an environment of fewer housing transactions, we clearly see many customers investing to protect the value of their homes. As ever, we remain focused on retail fundamentals. We have refreshed our overall ranges and launched many new own exclusive brands tailored to our banners' needs. Product availability is at the highest since pre-pandemic, and we continue to deliver value to our customers through price freeze, comparing price reduction on key ranges and through our OEB and discount banners. We have maintained competitive price indices across our banners while managing cost inflation effectively, and we expect this to continue. We are encouraged by what we have seen in H1 and in our current trading with regards to improving volume trends in our core and big-ticket categories. So earlier this year, we refreshed our Powered by Kingfisher strategy to ensure data, trade, culture and agility were given increased prominence and focus. Doing so also gave us better alignment with our investment for growth in multiple areas of the business. We continue to make strong progress against these strategic priorities, which, as a reminder, are listed here on Slide 22. And I would like to spend a few minutes taking you through some of the more significant areas of progress, and starting with Slide 23. So we are pleased with the progress of Screwfix expansion outside the U.K. Ireland has been a great test case for the model of building brand awareness and critical mass through an online-only offering before committing to a physical estate. We opened our first store in Ireland in late 2019 after operating as a pure-play online business for 4 years. We now have 36 stores with strong sales growth. In France, we are continuing to make positive steps in the markets that provide us with very large growth potential. We opened our first stores last year and now have 9 stores trading in Northern France with a further 2 stores due to open next week. Our brand awareness is increasing strongly, and we are focused on building this further. We are expanding our ranges to give customers more choice with 14,000 SKUs now available to our customers. In particular, our OEBs are lending well with French customers. We're also expanding our services by launching Trade Credit in H2 and testing Sprint 1-hour home delivery in Lille, giving customers more convenience options. And we are doing this while maintaining a very strong price index. And as you can see from the bottom of the slide, customer satisfaction scores and feedback are very encouraging so far. Our plan in H2 is to further develop these key elements of our customer proposition to support the sales evolution of our stores. As such, we now plan to open up to 20 new stores this year rather than the 25 previously guided. And finally, we are excited to be launching Screwfix in Q3 as a pure-play online retailer in Continental Europe via delivery -- with delivery via our French distribution center. We will expand over time our delivery service across Europe to up to 20 new countries. And the first wave will include Poland, Spain, Belgium and the Netherlands. Customers will be able to access the Screwfix offering and brand in 4 languages with full visibility on pricing in their own local currency. So while there are no plans for physical stores in these countries in the near term, this is a low risk, an exciting step towards expanding one of the U.K.'s most popular retail brands into new markets. Moving to Slide 24 and the progress of our e-commerce marketplace. Expanding customer choice through this proposition is a key driver of our ambition to reach 25% e-commerce sales penetration for the group. We are at 16.8% today, up 1.2 points on last year and nearly 10 points higher than 4 years ago. Overall, we are very pleased with the progress made on marketplace. Since the launch of B&Q last year, we now offer customers of diy.com over 700,000 additional SKUs across more than 20 core categories to over 750 third-party merchants. And as we grow our range, we have seen a significant increase in customer traffic and conversion. 30% of marketplace customers are new to diy.com, and 10% of customers who purchased a marketplace product went on to make a purchase from our first-party range. Indeed, most of our best-selling marketplace products are ones that complement our first-party offering, which demonstrates the power of the proposition. Marketplace sales at B&Q reached 33% of its total online sales in July. In Iberia, where we launched the proposition late last year, we are already at 11%. And with a take rate of 10% to 15%, the revenue contribution of marketplace is now meaningful and enough to move the dial upwards on B&Q gross margin rate. As the business scales further and we launch in other banners at a low incremental cost, we are excited about the profit opportunity here. Our plans going forward remain ambitious. We will reach 1 million SKU at B&Q and leverage our new partnership with Octopia, one of the biggest marketplace merchant aggregators in Europe. We are preparing to expand the technology into France and Poland in 2024. And finally, we are trialing additional B2B services for merchants, leveraging our scale and resources to tap into what could be another interesting profit pool. As a reminder, our long-term ambition is for the group, excluding Screwfix, to generate 40% of its total e-commerce sales from marketplace. On Slide 25, I'm equally excited to share how we are leveraging AI and data at Kingfisher to unlock new stream of revenue, profit and productivity. And our progress here has accelerated rapidly over the last year with tangible financial benefits starting to come through. And I want to touch on 4 areas briefly. Firstly, we are driving top line growth through increased use of AI-powered recommendations such as best product and personalization engines. Currently live at B&Q and Screwfix, early results are showing improved conversion rates of over 100% with these engines, generating as much as 10% of B&Q online sales in a given month. Secondly, we are using AI-driven tools to optimize markdowns and clearance processes. Through the use of real-time data on stock quantities and product margin, we can employ algorithm that determine optimal markdowns and clearance offers rather than the blanket network-wide approaches. The aim here is higher margins, better sell-through of seasonal stock and improved efficiency in range changes. Although we are at early stages, pilots at B&Q in H1 delivered a very encouraging gross margin improvement on clearance products. Bernard has already discussed how we are using AI and data to optimize our supply chains. Our new supply chain visibility solution is already improving our forecasting, availability and visibility of out-of-stock items. And we believe this will support structurally lower inventory over time. And finally, we are using data to build new revenue streams. We discussed in March the opportunity to offer advertising to third-party merchants through retail media. This is now live in Castorama and Brico Dépôt France. And we also initiated partnerships with CitrusAd and Unlimitail, the new European retail media joint venture between Carrefour and Publicis. We see the potential for this income stream to reach up to 3% of the group's e-commerce sales. So we have moved very fast on AI and data, and we are excited by the progress here. This is a real demonstration of the culture and agility of Kingfisher as well as showing how the power of the group can drive stronger results from our banners. And finally, here on Slide 26, an update on the progress of our trade strategy. The trade or pro market is a key one for Kingfisher. Demand from this customer segment has been a source of resilience for us in recent years. And as I've said before, expanding trade customer penetration is a significant driver of sales density and profit growth. We have already covered our international growth plans for Screwfix. And in the U.K. & Ireland, our aim is for over 1,000 stores from 884 today. Elsewhere, we are making solid progress. At B&Q, we have opened 18 new TradePoint counters, expanding its presence to around 2/3 of the B&Q estate. TradePoint, at 20% B&Q sales, is one of our best-performing banners over the last 4 years and is targeting over GBP 1 billion of sales in the medium term from over GBP 830 million last year. During H1, we launched tests of dedicated trade zones in 27 stores at Castorama Poland and Brico Dépôt France, bringing dedicated product, services and colleagues to trade customers. And early results in both banners are very encouraging. We're also piloting dedicated trade sales partner roles to build more personal relationships. Over time, we believe this will enable us to capture a greater share of wallet of our trade customers. We continue to leverage our strength in OEB to develop and launch trade-focused products, for example, our Flomasta plumbing range, which is performing well in the U.K. We are also enhancing our services to trade people, including more tool rental services, more flexible payment and finance options and more delivery services such as direct to site. On the digital side, we stimulated a significant increase in customer awareness of Screwfix 1-hour delivery service following a very successful marketing campaign in the U.K. Following this, national awareness levels of our Sprint service moved from 25% to 40%. We're also leveraging our focus on data to provide personalized and tailored offers to customers. And finally, we are developing our loyalty programs. TradePoint saw a 37% increase in new sign-ups in H1. And at Poland and Brico Dépôt France, we are trialing new loyalty schemes with early results showing a significant increase in frequency of shop and average basket size. So our trade and DIFM sales penetration at Kingfisher is already at around 50%, but there is significant runway for the trade segment, and we have made positive early steps in this journey. And turning now to Slide 27, I would like to set out our 4 main priorities for the second half. First, we'll continue to maintain a disciplined trading along with a competitive price index. This requires careful monitoring of market conditions and consumer sentiment and, as ever, to manage cost inflation efficiently. Two, we want to continue the strong operational momentum that we have been in the U.K. Over the last 4 years, our U.K. banners have acted as test cases for many of our group strategic initiatives to the marketplace, AI and data, OEB trade, e-commerce fulfillment and also new store formats. This is clearly showing in the consistent results of B&Q, TradePoint and Screwfix. Then three, as Bernard discussed, we are continuing to actively manage our costs across the business, ensuring alignment to the top line. This is important across the overall group. But for reasons discussed today, there will be a strong focus in Poland and France. And finally, we are focused on accelerating key elements of our strategy, which we believe will move the needle on our financial performance. And this includes driving higher trade penetration, further developing our marketplace proposition, extending the rollout of Screwfix into new geographies and accelerating retail media and the use of AI across our business. We also remain focused on structurally reducing our inventory supported by AI and data. So while we are clear on our near-term priorities, on Slide 28, I would like to remind you of the outcomes we are aiming for our investment for growth. First and foremost, we are focused on growing sales ahead of our markets. This is through a combination of like-for-like growth, driven by our strategic areas of focus, and net space growth from expanding our presence, notably in Screwfix and Castorama Poland. We believe adjusted PBT will grow faster than sales in the medium term as we continue to focus on cost productivity driving sales benefit and through higher-margin initiatives such as marketplace and retail media. And this is a business that should continue generating healthy levels of cash. We expect GBP 400 million to GBP 500 million of free cash flow next year, followed by in excess of GBP 500 million for the following years. And this will be supported by profit growth across each of our banners. So while we'll continue to invest capital to drive our growth, we will also continue to return excess capital to shareholders, as we have shown today with our new buyback commitment. So overall, we remain very aware of near-term challenges, but also very positive on the medium- to long-term outlook for home improvement growth in our markets. And we are confident in our ability to grow market share and deliver on these objectives. So now to quickly summarize on Slide 29. Although in H1, we delivered a sales performance that was slightly better than expectations, this was against a backdrop of volatile and unseasonal weather and clear macroeconomic challenges in many of our markets. Highlights included the performance of our U.K. banners, the improving volume trend in our core and big-ticket categories, and the ongoing resilience of the trade segment supported by the consumer trend of improve, not move. Our adjusted PBT result show resilience in the U.K. and France, but challenges in Poland, which we are addressing. So to better reflect our H1 results and the trading environment in our markets, we have updated our profit guidance for this year and set 4 key priorities for the second half. We're investing for growth and making strong progress against our strategic priorities, and we remain very positive on the medium- to long-term outlook and expect to begin our new share buyback program early next month. So thank you all for listening this morning, and Bernard and I would now be happy to answer any questions. So over to you, Maj.

Thanks very much, Thierry and Bernard. We're going to start the Q&A from the audience here. So just give us a few seconds with the microphones. All right, all set.

Okay, we're going to start with Anne, please?

It's Anne Critchlow from Societe Generale. I've got 2 questions, please. What percentage of GMV is online at -- sorry, B&Q these days, please, in the first half? And then secondly, on unsold seasonal stock, to what extent do you expect to sell this through at full price next year?

Yes, thank you. Thank you for the questions. I think, again, the marketplace, we started last year. We are gradually growing our online penetration. So past months, if you look at GMV as a percentage of B&Q online sales, we were above 30%, even at some months above 33%, which is clearly ahead of our expectation. And Iberia as well, we are gradually every month improving the e-commerce penetration of the marketplace. On inventory, I will let Bernard give you a few data. But overall, we are pleased with the decrease of our inventory. Obviously, we have inflation on prices. So we have to look at volumes. Our volumes are down 11% year-on-year. And clearly, we have ongoing plans to continue to reduce our inventory in the coming months. I will let Bernard comment on the seasonal part.

Yes. Thank you, Anne. And just a reminder, obviously, seasonal is just a very small part of our inventory. If you look in our sales, it's 78% core/big-ticket, 22% seasonal. And within that, a very small part is what we call perishable. So there's the natural perishable like [ horti ]. But the other elements, it's -- really, we can hold it over to the next year just as we've done in the previous year.

We've got Adam, please?

It's Adam Cochrane, Deutsche Bank. First question I've got is on the chart, you showed quite helpfully about consumer confidence and various bits. But you talked about the French consumer confidence being at 10-year low. The U.K. consumer confidence, as I see it, is not fantastic. What can -- how can you sort of explain the difference as to why the U.K. is performing so well if sort of -- if consumer confidence is one of the sort of metrics that you're looking at to explain the weak France, but not the U.K.? And then secondly, the sales in certain areas, ahead of expectations, below in others. Can you help us benchmark what you're looking at for the second half in terms of your expectations, just so we can get a gauge of how aggressive or conservative you've been in terms of your sales expectations for the second half?

Thank you, Adam. Let me answer the first one, and I will leave Bernard for the second one. I think it's indeed striking to see U.K. versus France consumer sentiment because when you look at the macro data, you would say, well, France is doing well. But the perception of the customer is very different. Let's start with France, just to give you a few anecdote. Recently, we asked the French customer in the pool of what is -- what was their perception of inflation, they say 18% on average. And you have every day in the newspaper in France the topic around food inflation, shrinkflation, maybe you followed that, and discussion between Carrefour and Unilever and the French government. So at the end, it's every day, the first topic is food inflation. You had the pension reform, the strikes and demonstration, including early summer, you had, in fact, the worse weather in France than the U.K. So I can't go into detail. It's always not very good to spend hours on the weather explanation. But in fact, it was always too cold or too hot, but it was really a horrible year for the French seasonal. You can see the seasonal sales. So today, you are in the back-to-school period, that's what we say we are seeing a slightly slower sales trend in Q3 versus Q2. That's what's on French customer mind. U.K., again, you look at all the data, Q1 versus Q2 core, so core and big-ticket, just to clarify, it's everything that is not seasonal. So we follow the business in 3 categories: seasonal, big-ticket project and the core. So core in the U.K., Q1, plus 1.9%; Q2, plus 3.8% increase; and Q3 to date is as well very healthy. We see a very healthy order well in kitchen and bathroom in the U.K. And this survey, even though at relatively low level, clearly, we see positive signs in the U.K. So I would not play the economist and why is it so because you are in a better place than I do. But overall, that's what we are seeing, a very, very sharp difference between U.K. and the continent and still for Q3 today. Then for the [ second ] question, I'll leave it to Bernard.

Yes. In terms of sales, a couple of things to comment. First is you have seen a helpful movement Q1 to Q2 with like-for-like sales down minus 3.3% in Q1, then easing off to minus 1.2% in Q2. We've seen minus 2.4% in the most recent trading, so a little bit of pressure there. But what I would comment is, one, is we have less seasonal in the rest of the year. And obviously, as you've seen in the numbers, that's had a bigtime impact on the overall like-for-like. Two, the compares become easier. Poland was, last year, 25.9% like-for-like; in the second half, 2.7%, as the dynamics started to change, so that compares easier. And also in the U.K., the compare becomes slightly easier. And then what I would say is the good trends we're seeing both in like-for-like but also in volume in terms of core and big-ticket. And hopefully, that will be helpful in [ H2 ].

Okay. Warwick, please?

Warwick Okines from BNP Paribas Exane. Just following on about the second half thoughts and a question on pricing. Is it reasonable to assume that the gap between your volume and value of inventory at the end of the first half at 9% is a reasonable guess for the second half inflation? Or does it fade quite quickly towards the end of the second half? And perhaps you could give us some thought -- early thoughts about pricing in the next financial year.

Yes. Thank you, Warwick. That's inflation, pricing, let's start with inflation. The peak of inflation for us was H2 2022. We still see a meaningful inflation level in H1. I would -- we never guided on inflation, so I will not start today. You can try to guess from inventory, just to be careful of the inventory mix versus our sales mix. But -- so overall, meaningful inflation in H1. We still expect inflation in H2, but at a lower level, but we still see deflation coming in. Pricing, we continue to see a very rational behavior for everyone. So that's good. We have the -- some of the pricing power in many of our markets. But in no market, including Poland, we have seen competitors being unrational on prices. What we have seen is clearance. We have seen some competitor having too much stock and -- but that's pretty rational. You can't blame that as irrational. So we have seen more clearance in H1. We have seen [indiscernible] in Poland being very active in H1 to get back market share on their promo, while we have keep very disciplined promo plan in Poland in H1. We had our plan, we stick to our plans. So that's why we know we -- for us, it's very important to keep good price index. We believe market will stay rational looking forward. And at the same time, to keep a relatively disciplined trading, not to get crazy on promo, we have our plan, we prepare ourselves and we stick to it, but we want to keep a very good price index.

And maybe just a technical note on the inventory, the quick math indeed says value down, volume down 1 minus 2, the other minus 11%, inflation must be 9%. But what you're not taking into account there is also a mix effect in terms of ranging dealers in stock. So the actual inflation in stock is lower than that number. And also the CPI, we've seen falling quite over the period of H1. So that will also have a further impact on lowering CPI in H2.

We go to Rich, the next one.

Richard Chamberlain, RBC. Just linked to Warwick's question, Thierry, I just wondered if I could ask about sort of price perception in the marketplace. I wondered if you think the marketplace in the U.K. has actually improved the price perception because you've got different levels of price point, obviously, a much wider range. And could that also be the case when that's rolled out to other markets? And then I just also wanted to ask about Screwfix France. It sounds like you've just cut back your planned number of openings a little bit for this year. But I mean, how does that affect your longer-term view of the potential for Screwfix in France?

Thank you, Richard. I think first, on marketplace, again, to be very honest, we don't see that as a clear point of improving our price image. We don't see that as a strong point today. It's really choice. You start with your search on Google, you have more choice. We are creating more traffic, and that's benefiting our third party and as well our own business online. So today, we are really pleased with the traffic generation, conversion, how much it flows to 3P, 1P. Price is okay, but I would not say this is a key driver of the traffic. It's really a choice, quality of the range, et cetera. On Screwfix France, to be fair, again, I would not take this 25, 20 stores as a big thing. We -- 20 is still a very big number. For years in the U.K., we're opening 50 stores. And I will not comment too much on competitors in France and elsewhere, but it's -- 20 is a very strong number. It's fine-tuning. We have decided to slightly slow down to focus on existing store sales. That's not -- there is no big thing behind that. And again, very pleased with, let's say, the industrial KPI of Screwfix France that are key. So first is the repeat of order, you [ record ] trade. What is a repeat? That's critical. We are watching that every week with John and the French team, price positioning versus competitor versus Amazon, ability to deliver on time, quality of the range, et cetera. So all those KPIs are right. What I said in March is the only thing we don't know is you need to -- a bit of time to check the maturation of the store sales is in line with your expectation. Today is really a few months, all according to plan, but we need more time to say, yes, that's a big success and we go for the 600.

So I've been neglecting the back of the room. Is there any -- are there any hands up at the back of the room at all? Are we all good? Yes, George -- oh, sorry, Saranja first. Sorry.

Ami Galla from Citi.

Okay. Sorry...

I'll just ask 2 questions. One on Poland. Can you give us some color on the disruption that you experienced in Poland because of the rollout of digital stack that you mentioned in your release? How material was that on numbers? And is that behind us, really? The second one, the Screwfix expansion online, is there a cost number associated to that? And medium term, what is the ambition and what is the sort of fulfillment cost associated with that, that we need to think about going forward?

Yes. Thank you for your 2 questions. You're right to spot that we have changed our technology in Poland just between Q1 and Q2. But clearly, I would be happy if it was the reason of Poland issues. Unfortunately, yes, we have been working on that. But clearly, the market environment and the consumer sentiment was the big thing. To be fair, I think the Polish team did all the right things. They are gaining share over 2 years. We have a great price index. We are managing our costs. We're still opening stores. We are improving our online operation. There is nothing much you can say. We were expecting a much better Q2. When we looked at last year, Q1, we did plus 55. Q2 last year, we did plus 9. And looking at the pace of post-war impact, boycott of our competitor, we would have expected a better Q2 looking at last year. It didn't happen, but it's not really linked to our digital initiatives. Screwfix online, I think 2 things. We really believe that for this brand, for the quality of the model, we have a lot of opportunities across Europe. We believe France is our first target. We have been very successful, you see in Ireland, by starting online and then gradually when we're already opening the first store. So we are getting ready in Europe. We are establishing the brand in more countries. We have now a distribution center in France in the European Union, so we can deliver easily, and let's see in the future where it goes. I've always said that the countries where Kingfisher has a presence is -- are easier platform for Screwfix, and we see that today in France by supporting the Screwfix France. But Screwfix online, let's see where it goes. We are very excited by this opportunity. Do you want to add anything, Bernard?

No, I mean, just to say, if you look at the U.K. Screwfix model, it's already mainly online, nearly 60%, and we're able to manage that very effectively and successfully. It's one of our most profitable banners. So we're looking to replicate that successful model in France also with stores or through an e-commerce model in the rest of the year to start off with.

Over to Georgios?

Georgios Pilakoutas from Numis. First one, a quick one for Bernard. Can you just quantify the benefit to the U.K. gross margin from the e-commerce marketplace? And underlying, would U.K. gross margins be, therefore, more similar to France at down 30%? So just trying to get a feel for those numbers. Second one is then on France. The Banque de France status lost a bit of relevance this year. So I was just wondering if you could give us a bit of a sense on where you think French market share trends have performed in the first half? And then a slight extension of that is just an updated thought on the French business. A lot of self-help has been done since you joined the business on pricing, kind of back-office supply chain. Yes, it still feels the French business is still in a slightly challenged place. And so I guess, perhaps updated thoughts on how does that French business improve from here?

Thank you. Maybe you want, Bernard, to take the first one on margins?

Yes, sure. I mean on the U.K., we're very happy with the contribution of marketplace. They have a good take rate. They're growing. That had a positive impact. The offsets were a little bit of stock provision and clearance. So yes, the gross margin would not have been flat, would be slightly weaker, but still in an overall good place.

I don't know if you noticed, but we had planned take rates between 10 and 15, and it's really right there. So we are, again, very happy with the first months of our operation for the take rates. Banque de France, again, clearly, we are not very comfortable with the methodology since September last year. I think there have been good progress recently in the clarification of the methodology. So I hope we'll have good news with the data and the participation of Kingfisher in the future to Banque de France. Our view is that Casto is -- the Casto like-for-like is in line or slightly better than the market. So you will see a slight difference versus Banque de France, and Brico is below. But clearly, therefore, you see a difference between U.K. and France in the market. France base, the foundation of the business now very healthy. Availability, supply chain, price index, the trading activities we are seeing in our businesses, the morale of the team, all that is very strong. Therefore, we are ready on our key strategic priorities. So Casto is really profitability. We said that in March. While Brico is above the average of the group, Casto is not. So we have a big profitability plan for Castorama. We believe that Casto, we have a big plan on e-commerce and trade as well. And Brico, we should leverage our discounter DNA. We have opened our first 1,000 square meter Brico Dépôt in a relatively small city. We are looking at that with a lot of care because we feel it could be a big thing for Brico in the future. Brico has very strong price index. We have been, to be fair, struggling with a few decisions, but I would not blame the team. We want to be agile. We want to test things. So they reallocated some of their advertising spending to digital. It was very good for digital, but we lost too much of store traffic. We have corrected that. So -- but strong fundamentals. Really, Casto, in a good place because we see resilient H1 and in line or better than the market, really focused on profit. And Brico, a bit more weaker for H1, correcting the few decisions, and it should be a very good platform for the future with discounts and new store formats.

All right. Any more questions from the floor before we go to the phones? That's good here. So I'm going to ask Irene on the phones whether we've got any questions, please.

[Operator Instructions] We have a question from Georgina Johanan of JPMorgan.

I've got 2 questions, please. Appreciate it's early days, but the first one was just on the outlook for next year. I think ahead of today, [ France ] was building in some top line growth and almost on the bottom line. It feels with some of your comments on the uncertainty around the French outlook and, of course, the Polish backdrop that, that might be more difficult to achieve. Just your thoughts on that would be appreciated, please. And then my second question was just around the U.K. cost base, obviously, up 9% or so year-on-year. I appreciate there will be some energy pressures that ease in the second half. But just given the uncertainty on the U.K. backdrop, like roughly like as a rule of thumb, how much of that cost base now should we actually be thinking about being variable with sales? Like how should we be thinking about the operational gearing in the U.K. business at the moment, please?

Thank you, Georgina. Let's start the first, and I think I will let Bernard comment on your second question. Broadly, we feel it's a bit early for us to comment too explicitly to 2024. The 2 things I would say today is we still see some inflation in 2024. So that's an important thing to note. We'll have a different dynamic by categories, probably some categories will see deflation. But overall, we -- our view is that we'll continue to see inflation in 2024. And two, we expect the market to stay very, very disciplined and very rational. Over the past 3 years, with different environment, we've always seen competitors being very rational and ourselves. And that's what we'd expect for 2024. Then on the cost dynamic, you could guess the wages and the energy dynamic for '24 will be relatively clear. But for us, the key thing is we still see some inflation, and we expect the market to be rational.

Yes. And then the U.K. installation or operating cost movement, the -- as we said, U.K. is one of the -- or the 2 banners have grown overall sales up 3.8%; like-for-like, 1.7%. So obviously, that then also factors into your operating cost. Those were up 8.9%. If you look at those components, part of it is obviously inflation, staff inflation being the main one, but also energy inflation, which, as Thierry said, will ease in H2 because the compare becomes easier. But there's also costs, for example, with the 59 net new store openings that we have year-over-year and a little bit more of tech spend. So I think you should look at that 8.9% in the combination of growing banners, obviously inflation, but also investment in growth. And then as we've shown in banners like France and others, there is an ability to flex costs. Basically, the measures that Thierry outlined for the -- for Poland would also apply to the U.K. And if you look at our staffing numbers, we are looking at that and where we can of flexing that down. But it's very difficult to pin yourself down to a number because there are a number of variables that factor in, in terms of what's the overall growth environment, how much are you investing in growth, but there is an opportunity to flex if we need to.

Any other questions from the phone?

There are no further questions on the conference line. I will now hand back over to Maj.

Thanks, Irene. Any final questions from the floor here at all? We've got Izabel at that back.

It's Izabel from Morgan Stanley. I have 2 questions. The first one is on Poland. I wanted to get your thoughts around the margin into next year because the government recently announced a 20% minimum wage hike. So I was wondering how much of that is already in your Polish cost base? Or should we expect further headwinds on the margin from that into next year? And then my second question is just to go back to the change in the updated guidance. Could you give us a few more details of exactly why you changed the guidance? I appreciate some of it already came through in the first half, but was it the sales? Was it the gross margin? It sounds like the costs, you have some flex there, but it will be good to get a breakout.

Thank you, Izabel for the 2 questions. I speak first about Poland. Yes, you're right to say the minimum salary has been strongly increased by the government, but it was already the case earlier this year. If I remember well, we had January and then we have April or May 2023. So that's partially reflected in our wages, and we had in Poland wages increase in H1. We are very cautious now on H2. So we are really cautious on wages increase in H2, and let's see where we go for 2024. But the minimum salary increase are already reflected in H1 in Poland. Now Bernard, the outlook...

Yes. And then in terms of the guidance, you're right, we updated that. Well, let's first look at H1. And if we look at what the -- one of the big factors was the weaker Poland, which was a combination of sales, especially in June, July, and then that seeped in also into the margin with a little bit more promo, a little bit more clearance. Now obviously, we have to see the dynamic in H2, but we factored that in as we looked at our guidance. And then as you will be able to read, given the market environment in France, it's slightly weaker maybe than we would have wished for. Factoring those 2 things, while the U.K. maintains a positive momentum, we said we need to adjust the guidance for the full year. So taking into account what we missed in H1; and second, these dynamics for H2.

And maybe just to add one other point, Izabel, just on the minimum wage point just because I had the benefit of talking to our HR officer last week on it, we tend to pay above the retail benchmark in Poland. So most of the top retailers in Poland will pay top quartile. So we look at that benchmark, which tends to be actually quite significantly above the minimum wage requirements, which captures then the next few -- the next minimum wage increases that you get. So that, I think, curtails the impacts that you're talking about. It's very standard for the top retailers.

And maybe while we're -- because I'm sure it's a topic people are thinking through when thinking about H2, maybe to say a little bit something about the comps, which obviously are -- if you look at the delta versus the prior year in H1, which was around 29%, and then you can do the math, it's softer in H2. But there are some components feeding into that, which probably is important to note. One, the overall comp at performance is easier in H2, as I said, for Poland and also a little bit for the U.K. Two, we will see an easing of inflation. So for example, the energy inflation is really in H1. If I look at H2, energy cost should be roughly the same across all the banners year-over-year. We've got less seasonal weight, so that was unhelpful in H1, won't have that drag in H2. And we had a number of one-offs that occurred, the ineffective hedges, some of the things with insurance on the central costs, which will not recur. And I think all those factored in and to compare that, we believe, should be easier in the second half, in addition, of course, to the fact that we're taking and accelerating our actions especially in Poland to make sure that we improve the performance there.

Thank you, Bernard. Very good. That's a wrap. Thierry, any closing remarks from you?

No, again, very happy to see all of you and happy to update on our progress, and looking forward to meet you very soon or during meeting or in one-to-one. Thank you. Have a good day.