Kingfisher plc (KGF) Earnings Call Transcript & Summary

Good. That looks like everyone is here, so thank you for joining us this morning to hear from Kingfisher plc, who announced their Q1 trading update yesterday. Today, we are going to hear from Maj Nazir and Anisha Singhal as they talk us through the presentation. There will be an opportunity for Q&A at the end, but please feel free to submit questions as we go through the deck or at the end as we are responding to them. And okay, with that, I will hand over to Maj.

Thank you very much, Hannah. So good morning, everyone, and many thanks for joining. My name is Maj Nazir, and I head up the investor relations team here at Kingfisher. I joined the business in January 2019. And presenting with me is Anisha Singhal, Deputy IR Director, who's been with us since June 2022. We're both delighted to present to you today and take your questions. So let's take a quick look at our agenda here on Slide 2. I'll start today's presentation with an intro to Kingfisher. Anisha will then run through our most recent financial results before covering our outlook and guidance for the year ahead. I'll then return to provide an update on our strategy and our longer-term positioning for 2025 and beyond. We'll then be happy to take any questions you might have. So starting on Slide 4, let me quickly summarize Kingfisher's attractive investment story. First and foremost, home improvement is an attractive and growing industry. The addressable opportunity in our markets is worth over GBP 160 billion, which has historically grown ahead of GDP. We believe this trend is reinforced by new supportive drivers such as more working from home and the urgent need to make our homes more energy efficient. Through our different businesses, our retail banners as we call them, Kingfisher possesses many distinct competitive advantages that enable us to win in our industry. This includes #1 or #2 market shares in our main markets, diverse banners, leading own brand products and a truly omnichannel proposition for customers. Leveraging these advantages, Kingfisher has multiple avenues to drive its long-term growth; and we believe this represents a compelling opportunity for investors. To Slide 5 and a brief overview of our operations and scale. We are Europe's leading home improvement retailer with over 2,000 stores in 8 countries. You can see along the bottom of the slide our extensive footprint in the likes of the U.K., France and Poland. Our banners, which include B&Q, TradePoint and Screwfix here in the U.K. -- and I hope you're all customers of many of those businesses. They sell home improvement products and services to DIY and professional trade customers. Our sales is split roughly 50% to DIY customers; and 50% to professional trade, including what we call "do it for me" customers. Do it for me means that you sell to a retail customer who then has a trade professional carry out the work or installation. On Slide 6 and a quick overview of our group strategy which we launched in June 2020. And we call this Powered by Kingfisher. Each of the banners you see on the right has a clear positioning and purpose, and each address the diversity of customers in our main markets. For example, we serve trade customers through TradePoint and Screwfix. We have discount banners in Brico Dépôt France and Brico Dépôt Iberia. And we serve more general DIY needs through B&Q, Castorama France, Castorama Poland, Brico Dépôt Romania and Koçtas in Turkey. All commercial and trading decisions are made by each of these businesses, as they know their customers and their needs best, so what is the role of Kingfisher Group? In simple terms, our job at Kingfisher is to leverage our scale to empower our retail banners and accelerate their plans. This means leveraging Kingfisher for 3 core competencies: technology, own brand products and international support and scale. Turning to Slide 7 now. And we've listed Kingfisher's 8 strategic priorities, with a common aim of strengthening our banners' customer propositions and powering growth. I'll go into detail on a few of these priorities a bit later. On Slide 8, we summarized the key value drivers for each of our banners, their relative size and positioning and how each of them leverage Kingfisher to achieve their full potential. Let's take the example of B&Q, which at just under GBP 4 billion of annual sales represents 30% of Kingfisher's turnover. It's the market leader in the U.K. and Ireland with 311 stores. The key value driver of the business going forward is like-for-like sales growth. And to reinforce this is leverage Kingfisher in the last few years to develop a new e-commerce marketplace, a revamped proposition for trade customers and more recently to launch advertising through its digital channels. And more on all 3 of these drivers a bit later. You'll see with the other banners that they also leverage Kingfisher Group but only where it makes sense to do so. Our job is to not be prescriptive but rather to support, to empower and to accelerate. On the bottom of the slide, you can see the scale of our banners in terms of sales and retail profits, with the U.K. representing 70% of group profit. France represents approximately 20%, and the balance is Poland at 10%. And finally, before I hand over to Anisha, let me cover the great work we are doing on responsible business here on Slide 9. Since the establishment of our strategy, we've embedded our corporate and social responsibilities through everything we do. We believe we're the industry leaders in our responsible business practices, which centers on 4 key priorities. The first is colleagues, where we pride ourselves on doing the right thing for our people on matters including fair pay, learning and development, diversity and inclusivity. The second is planet, where we are passionate about reducing our impact on the environment. We're making great progress against our near-term carbon reduction targets for scope 1 and 2 emissions, and we're also working hard to reduce scope 3 emissions as well. Third is customers, where we're helping to make customer homes greener, healthier and more affordable. Our sales of sustainable home products now represent around half of Kingfisher's overall sales. These are products which are either made from renewable materials, manufactured in an environmentally friendly way or indeed help customers save energy or water. This latter area will be a key growth driver for us in the coming years, particularly as governments mandate housing stock upgrades to push towards their net 0 targets. And finally, on communities, we are helping to fix bad housing, which remains a pressing issue. Over the last 7 years, we've helped over 3 million people with the greatest housing needs. And we aim to do even more in the coming years. And with that, let me now hand over to Anisha to take you through the financials in more detail.

Thank you, Maj. And good morning, everyone. So if we start here on Slide 11 and the key financials for the most recent financial year which runs from February 2023 to January 2024. Our total group sales last year were just under GBP 13 billion, which as Maj mentioned makes us the leading European home improvement retailer. Around 50% of these sales are from our U.K. and Ireland banners B&Q and Screwfix. Around 1/3 is from France, primarily Castorama and Brico Dépôt. And the remainder is from our other international business, of which the largest is Poland. Last year, sales fell 1.8% year-on-year in constant currency, i.e., removing the impact of foreign exchange. We generated gross profit of GBP 4.8 billion, which gives us a gross margin of 36.8%, relatively high in the non-apparel retailing sector. Our margin was up 10 basis points versus the prior year, reflecting our active management of inflation and supplier negotiations, partially offset by higher customer participation in our promotional activity in France and Poland, particularly in the first half of the year. Our group retail profit was 5.8%, with our largest operating costs of the business being store costs, things like rent and utilities; store staff; and technology. The decrease you see in the margin of 130 basis points year-on-year reflects higher operating costs largely due to staff pay rates, energy costs and technology spend. This all was -- resulted in adjusted profit before tax of GBP 568 million, down 25.1% on the year before. Kingfisher is a strong cash generator, with free cash flow of GBP 514 million generated last year. And we have a very strong balance sheet with only around GBP 100 million of financial debt. Our net debt is driven by our property leases; was just over GBP 2.1 billion, giving us a net leverage of 1.6x EBITDA, unchanged from the prior year. Moving to Slide 12 and looking at our Q1 results which we announced yesterday. Trading in the first quarter, which was the 3 months to the end of April, was in line with our expectations. We delivered Q1 like-for-like sales growth of minus 0.9%. We saw resilient seasonal sales despite unfavorable weather in April. Kitchen and bathroom, which we call big-ticket sales, were weak, reflecting the broader market as expected. Our core sales, which represent the rest of our sales excluding seasonal and big-ticket categories, were, however, resilient. In the U.K., we have seen strong market share gains across all our banners. In France, we saw a slight improvement on Q4, and the trading reflects the weak overall retail market. And in Poland, we are seeing encouraging sales trends as the consumer environment improves. We continued to drive our strategic priorities at pace and remained focused on delivering market share growth. We remained focused on driving productivity gains while also maintaining tight control of our costs and inventories. And looking forward, we confirmed the guidance we outlined in March for the full year, including our expectations for the overall market in 2024 which I will cover in the next few slides. So moving on to our outlook and guidance for the year ahead, on Slide 14. So to give you an insight into our scenario planning process, we'd like to present our view on the outlook for home improvement in our markets. In the U.K. and Ireland, we observe a relatively resilient consumer; and continue to expect repairs, maintenance and existing home renovation to be supportive. However, we are mindful of a couple of things. First is the continued strain on household finances. And second is a 9- to 12-month lag, on average, which we see between people buying a home and making a home improvement purchase. As a result, our outlook for the U.K. and Ireland home improvement market as a whole in 2024 is somewhere between low single-digit decline to flat year-on-year. In France, we continue to see a subdued consumer confidence and a weak housing market. This supports our home improvement market outlook of mid-single-digit decline in a low case and low single-digit decline in the high case. And finally, in Poland, more recently, we have started to see inflation, interest rates come down from their peaks in 2023. Consumer confidence is slowly improving, with potential for further improvement as households benefit from real wage growth this year. We therefore expect the home improvement market in Poland to be somewhere between flat and low single-digit growth year-on-year. We also regularly survey retail and trade customers in our key markets to check the pulse of our -- of the consumer. Overall, these surveys highlight a gradual improvement in sentiment but still some caution on the retail and trade consumer intentions in the short term. So bringing this together on Slide 15 with our market outlook and the guidance for the year. Repairs, maintenance and existing home renovation generate approximately 80% to 85% of our sales, with the balance being driven by move home renovation. We therefore expect repairs and maintenance and existing home renovation to provide resilience, but we are cautious on the overall market, as I just explained on the previous slide, given the lag between the housing demand and home improvement demand. For the year ahead, you can continue to expect a focus from us on growing ahead of our markets and leveraging our key strategic priorities, which Maj will cover more of in the next section. In terms of trading, we have demonstrated very well in recent years we continue our effective management of product costs and retail prices while maintaining competitive price indices. We are also targeting an additional GBP 120 million in structural operating cost reductions and productivity gains this year. This includes costs from areas such as labor, store operating costs, lease costs, technology and goods not for resale. In addition, we are targeting savings in our supply chain through the increased use of AI-driven technology. These cost reductions will partially offset higher pay rates and technology investments. Taken together, we expect full year adjusted profit before tax of GBP 490 million to GBP 550 million and free cash flow of GBP 350 million to GBP 410 million. Let me now hand back to Maj to take you through some of our key strategic priorities.

Thank you very much, Anisha. As I mentioned earlier, I'd now like to talk you through a few of our key strategic priorities. I'll cover progress made to date and the significant growth potential we see in the future, so let's start here on Slide 17 with the opportunity for store expansion. Now while we already have an extensive store footprint of 2,000-plus stores, we've identified white spaces and catchments where some of our retail banners are currently underrepresented. At B&Q, we now have 10 stores under the B&Q local sub-branding, leveraging our compact high street format to -- in order to penetrate more urban areas. We believe there are over 50 white spaces to go after in the U.K. B&Q's trade-focused banner TradePoint opened counters in 21 B&Q stores last year, meaning it's now present in over 200 stores or 2/3 of B&Q's network. In the coming year, we'll begin testing TradePoint counters for smaller B&Q stores to increase our presence in this part of the estate. Screwfix is one of the U.K.'s most popular brands and has been an incredible success story over the last 25 years. Last year, it opened 51 stores in the U.K. and Ireland. And with a total of 922 stores, it's firmly on track towards its goal of over 1,000 stores in those countries. We expect to open up to 40 new stores in 2024. And while we're still relatively new in France, Screwfix now has 24 stores open in that country; and we're encouraged by the results, so far. We see the potential for more than 600 stores in France over time. Castorama Poland remains an exciting expansion opportunity. There is significant white space in the country, with potential for [ up to ] 75 new stores over the next 5 years. And finally, Brico Dépôt is well positioned to penetrate more white space in France with its leading discount format. It opened its first compact stores last year, an innovative 1,000-square-meter format. Over the medium term, we believe store growth will drive an uplift in sales of around 1.5% to 2.5% per annum. Turning now to Slide 18 and our ambitions for e-commerce and marketplace. Overall, e-commerce sales make up around 18% of Kingfisher's sales. That's more than twice the level of 5 years ago. Much of the strength in our e-commerce performance last year was down to the success of our new marketplace at B&Q which allows third-party vendors to sell products on our e-commerce platforms. In less than 2 years, B&Q was -- reached 200 million of gross merchandise value via its marketplace. Now at B&Q, marketplace allows us to offer customers an additional 1.2 million products, all available via home delivery. That compares to 40,000 products we offered in store and online just 2 years ago. Convenience is also key, as customers are able to return marketplace products in store. Third-party merchants are choosing us for our high levels of customer traffic, our trusted retail brands and our sophisticated back-end capabilities and services. We take a 10% to 15% commission across our marketplace sales. And with a relatively low cost per sale, marketplace is already delivering strong returns, and the potential for further growth is very significant. In the U.K., we aim to reach 2 million products at B&Q, providing significant additional choice for our customers. And we're really excited about extending our success to France and Poland as well. With the technology already built at Kingfisher Group, [ this can be done ] at minimal cost. In March, Castorama France launched its marketplace. And Castorama Poland will [indiscernible] launch its marketplace in the second half of this year. E-commerce is a major growth opportunity for Kingfisher. Our ambition is to reach an online sales penetration for the group of 30%, from around 18% today, and 1/3 of that will come from these high-margin marketplace sales. To Slide 19 now. And another area where we've moved at pace is retail media. Now we receive a staggering 1 billion customer visits to our e-commerce touch points across the group every year. And we're leveraging this to give our suppliers and sellers the opportunity to advertise on our sites as well as benefit from our data analytics to improve their appeal to customers. Last year, we launched retail media in our 2 banners in France and as well as B&Q in the U.K., with multiple suppliers now advertising via our e-commerce channels. Our priorities this year include expanding the retail media offering into Screwfix, Castorama Poland as well as Brico Dépôt Iberia and Romania. We'll also launch a retail media proposition for marketplace sellers. Over time, we see the potential for retail media revenues to reach up to 3% of our e-commerce sales. And we're really excited about the opportunity here. Finally, on Slide 20. Our strategy is to drive more trade customer sales. Trade customers tend to visit more frequently and spend more than retail customers, and so it's logical to try to increase our appeal to tradespeople. This is a key priority for Kingfisher and is already delivering very positive results as we extend our proposition into France and Poland. Through TradePoint in the U.K., we've created a blueprint for our ambitions in terms of products, prices, loyalty programs, dedicated trade counters and dedicated colleagues. As I mentioned, TradePoint is now present in 2/3 of B&Q's store network. Last year, we recruited trade sales partners in 39 stores to build more direct and personalized relationships with our trade customers. And we're already seeing positive early results with TradePoint delivering GBP 834 million of sales last year; and a stellar start to 2024, with first quarter sales up 8.5%. The business outperformed B&Q as a whole and gained market share. And we're extending our learnings here to other banners across the group. Last year, in France, we launched tests at 24 Brico Dépôt stores with dedicated trade zones, colleagues and a new loyalty program. Within these stores, we saw a doubling of trade sales penetration. Given this early success, earlier this year, we completed a nationwide rollout to all Brico Dépôt stores in France while in parallel stepping up our tests at Castorama. Similarly, in Poland, we're testing CastoPro zones. And that's a store-in-store concept quite similar to TradePoint in the U.K., with separate entrances to stores, supported by a new loyalty program and dedicated sales partners. This year, we intend to expand those store-in-store pilots to 10 additional locations in Poland, supported by the national rollout of our pro loyalty program. And over the longer term, these plans support our ambitions to increase TradePoint sales to over GBP 1 billion and to double our trade sales penetration in France and Poland. In the next section, I want to cover our plans to improve our sales and profit performance in France. Having made significant progress over the last 4 years in fixing historical missteps in both strategy and operations, we're now ready to take our performance in France to the next level. In March, we announced the final stage of our plan, highlighted here on Slide 22. First, we've simplified the overall structure of the organization by dissolving our Kingfisher France structure. This has moved more decision-making power to Castorama and Brico Dépôt, making them more agile and eliminating duplication of work. We've made key leadership changes, with Pascal Gil becoming CEO of Castorama France. Pascal started his career at Castorama before leading Brico Dépôt Iberia and France, before becoming CEO of Poland in 2022. Second, we've constructed a clear and actionable plan for Castorama. We will restructure and modernize the store network, improve operating margins and grow sales densities. This includes rightsizing some stores which are too large for their catchment areas. It also includes converting some stores to the more profitable Brico Dépôt model. And we're also exploring the option to franchise certain Castorama stores, which will increase store efficiency. Finally, we will strengthen the discounter credentials of Brico Dépôt to drive more like-for-like sales. The business aims [ to capture ] demand from trade customers, roll out new store formats and further improve its productivity. Based on this plan, our target is to achieve a retail profit margin for France of circa 5% to 7% over the medium term. Turning now to Slide 24 as we bring all this together to see what it means for our business in 2025 and beyond. First, it's clear that we operate in attractive markets with positive and supportive long-term trends. We're confident that we'll deliver sales growth ahead of these markets. That growth will be driven by LFL sales; and supported by our areas of strategic focus, e-commerce, marketplace, our own brands, our continued penetration of the trade segment of our industry. It will also be driven by more stores, which we believe can drive an uplift to sales of circa 1.5% to 2.5% per annum over the medium term. Second, we'll grow our adjusted profit before tax or PBT faster than we grow sales. This is supported by scale benefits and higher-margin initiatives such as marketplace and retail media as well as our cost reduction programs. We'll also generate strong free cash flows, which in turn will drive reinvestment in the business as well as shareholder returns. Next year, financial year '25, '26, we aim to generate free cash flow of circa GBP 450 million. Beyond 2025, we aim to deliver in excess of GBP 500 million of free cash flow per annum; and that will be supported by profit growth and inventory reduction. In summary, the compelling strategic drivers of the business provide a clear opportunity to deliver attractive top line earnings growth, as well as our continued focus on shareholder returns. We have clear capital allocation priorities, as shown here on Slide 25. The priority is to reinvest in the business where there are compelling and profitable growth opportunities. Our target capital expenditure is circa 3% of sales every year to drive our organic growth. On dividends, our aim is progressive growth over time. Our dividend cover range remains at 2.25 to 2.75x, based on adjusted earnings per share. That represents a payout ratio of between 36% and 44%. And we have a clear track record of returning surplus cash to shareholders. Over the last 5 years, we've returned over GBP 1.6 billion to shareholders via both dividends and share buybacks. And if you're still with me, I'd like to summarize by revisiting our investment thesis on Slide 26. We see the home improvement industry as extremely attractive. While already large in scale at around GBP 160 billion in our key markets, we're excited about the many long-term growth drivers. These include an aging housing stock across our European markets, which support repairs, maintenance and renovation; as well as an increasing need for greener and more efficient homes. We also see many supportive socioeconomic trends. There is a high level of home ownership across the core customer groups in our markets. And we continue to notice a sustained trend of more working from home and a budding generation of post -- of young DIYers that have emerged post COVID. We then believe Kingfisher has many distinct competitive advantages that enable us to win in this industry. First, we maintained leadership across all our key geographies with #1 or #2 leadership positions. These were achieved through our diverse banners and store formats which resonate with customers across general DIY, trade and a discount market. We have group scale and resources which power our banners from product development and supply and technology and buying. And our own exclusive brands where we control product design and development account for around half of our sales. These are a treasure for Kingfisher. They enable differentiation and innovation at affordable prices for customers and a higher margin for us. We now have a powerful digital proposition supported by a strong store network and our leading-edge technology infrastructure. Combined, this creates a -- our best-in-class omnichannel offering. And as I mentioned earlier, we're leading our industry in responsible business and energy efficiency. Leveraging these advantages, Kingfisher is very well positioned to win. We have multiple growth drivers; and the expansion of Screwfix, e-commerce and marketplace, retail media and trade. We're highly cash generative with one of the strongest balance sheets around in U.K. corporate. And we have a strong track record of paying dividends and returning surplus capital to shareholders. As, I hope, it's now clear to you, we're excited about our industry, our growth drivers and the compelling returns opportunity for shareholders. And with that, we thank you very much for listening to us and now open the floor to questions. Over to you, Hannah.

Thank you very much. And we are certainly still with you, so let's have a look. We've got a number of questions here.

How do you manage the complexity of what might seem like disparate businesses? For example, the different banners, different regions and different formats.

Thanks very much, Hannah. I'll take that one. So I think, first of all, we see diversity as absolutely important. It's absolutely vital in an industry that's -- and a world that's forever more volatile or uncertain et cetera. So having diverse banners that address the diverse world we live in is super important. In terms of complexity, I think that's probably more of a myth than it is a reality. I mean, yes, we are -- we do operate in multiple countries. Yes, we do operate multiple types of retail banners, but ultimately Kingfisher is at probably its simplest form in over 20 years. We -- the retail banners, as I mentioned, are in charge of running their businesses, in charge of dealing with their customer needs. And the role of Kingfisher, if we keep it really simple, is just to provide 3 things, product, technology and international support, so we feel comfortable with that it's probably a bit simpler than perhaps is sometimes reported on.

Okay. And so you touched on France there during the presentation, and removing the top layer of management. How do you anticipate this impacting performance of both banners there in France?

We think it's really supportive. I mean the -- in terms of the structure that we see in France, it's not dissimilar, Hannah, to the structure we have in the U.K. So we have -- we don't have a Kingfisher U.K. organization. It's B&Q. It's Screwfix. The leaders of those businesses sit on our group executive team, reporting in to our Kingfisher CEO, Thierry Garnier. France historically have had one organization that then covers both retail banners in that country. That does lead to some efficiency but also some duplicative work as well. And it can sometimes add bureaucracy and red tape to decision-making processes. So we feel very comfortable that the U.K. model works well. We've replicated it in France. We've brought Pascal in across, rather, from Poland to run Castorama, which is obviously the biggest challenge we have internal and the biggest challenge we've had in terms of performance in the last few years. And we feel really confident in the plan that we've set out.

Okay. Sticking on a French theme. How long do you think it will take to get your target 5% to 7% retail profit margin given you expect the French market to continue to decline in 2024?

Yes. Simple answer is 3 to 5 years. We've set out the 5% to 7% margin target for France. We've said that we'll achieve that over the medium term. Medium term, we define as 3 to 5 years. Yes, there is clearly some short-term considerations in terms of the market. I think Anisha has set out very clearly that 2024 is going to be a challenge. We've been very transparent and open about cyclical and consumer factors underpinning that, but this is an industry that has exhibited really stellar growth over a long period of time, so we encourage all of our shareholders to look at the long-term picture, where the macro has traditionally been very supportive, but perhaps more importantly, to look at what we're doing within Kingfisher to actually grow ahead of the market.

Okay. Well, on a day when we've had some more good inflation news, can you give us a little bit more flavor on the external environment and how the Kingfisher team perceive the businesses' alignment with the wider economic cycle? Are you just a cyclical play?

No, we're not, is the answer. And I think that there's obviously a link to our business from a happy consumer; lower interest rates, which means lower mortgage rates. And that typically means more people will move home. And that can only be good for home improvement, but as Anisha set out, the demand for home improvement products related to people moving home and buying a new home is around 15% to 20% of our sales. Actually the significant amount of our sales is linked to repairs and maintenance activity. And that's the reality is that things break down in our homes every single day, but also, apart from that, which is typically around 2/3 of our sales in any given year, you also have demand linked to renovation of existing homes. And I'm sure many of the viewers today will have been out to a B&Q store over the last couple of weeks where the weather has been good, preparing their gardens for barbecue season, perhaps buying some new paint to refresh their walls and ceilings. And that's the reality is that, when you look at the stage of the economic cycle that we're at, yes, inflation has been high. Interest rates are still high, but the fundamentals of the economy are not terrible in terms of unemployment, in terms of the amount of savings people have, so we have seen actually people willing to spend a bit more of their cash on renovating their existing homes, perhaps while they're waiting for mortgage rates to sort of taper down before thinking about their next move. So I think, in summary, sentiment will tell you that the macro, the cycle is key for Kingfisher. If you look at our share price, probably there's a strong correlation there, but the reality is that we're a lot more diverse than just being linked purely to a house move.

If I can just add to that as well, I think, with the trends of more people working from home and spending more time at home, the sort of vision of home being more of a hub. And the focus has really changed as well, so that's more of a structural driver going forward; as well as what Maj talked about with energy and water efficiency being more of a trend. So not only because people are more conscious about their own carbon footprints and how they want to help the planet, but purely from a cost perspective, the way that energy bills have been so volatile in recent years, we've seen a clear trend towards people investing in their homes for green renovations to help them save bills as well. So those structural drivers are clearly somewhat less linked to -- they are -- will be to some extent because it's people's wallets, but because they're more structural in their nature in terms of the willingness to spend more time at home, then that's less linked to the macro.

Yes. I mean I think, if you'll indulge me for a second, Hannah, I just want to add one more point to that because I think it's such an important question. And if you look at U.K. performance in Kingfisher, so B&Q and Screwfix: Over the last 18 months or so, where the cost of living has absolutely been an issue, inflation has been higher than where it is today. Interest rates are still high. You've actually seen B&Q and Screwfix turn in some pretty resilient results. So why is that? I mean a lot of it is down to actually the application of key elements of Kingfisher's strategy that we run through today. So if we think about trade, for example, so Screwfix -- about 80% of Screwfix' business is to trade customers. B&Q, over 20% of its business is TradePoint, so trade provides us a certain level of, I almost want to say, countercyclicality, a level of resilience and where repairs, maintenance, existing home renovations happen all the time. The other area is e-commerce, and we've talked about that at length in the presentation. And that adds another layer of resilience to the boat as well, so taking that as evidence that it works, as I mentioned, we're looking to put those elements of the strategy into France and Poland now at pace to give similar levels of resilience going forward. And we think that's a really important point.

Okay, well, thank -- well, let's [ drift on that theme ] because we have another question addressing that point of TradePoint and Screwfix have been successful. How do you see the ongoing shift in total group sales to trade and do it for me? And do you think that shift from DIY to DIFM is still ongoing?

I'll -- let me start, and I'll let Anisha add to it. I think that's another myth, if I'm honest with you, in terms of that movement toward do it for me. I think -- for anyone who's interested and has followed this industry for a number of years, I think you saw DIY peak probably about 20 years ago. And for anyone who remembers watching BBC Changing Rooms, you had a lot of people just take up a lot of interest in putting up a shelf and paint and revamping their homes. And yes, at that point 20 years ago or when Changing Rooms stopped [ broadly ], I think you saw a bit more of a shift towards do it for me, but in the last 10 years, it's been, broadly speaking, stable at 50-50. During the pandemic, you saw a bit of a spike because we were all locked down with pretty much nothing to do actually apart from DIY. So we learned some new skills. Suddenly, younger people got engaged, but it's absolutely stabilized now.

Okay. About half your sales are your own brands, which is a real strength. Can you talk about how you think about product development for these brands to offer consumers more affordable and sustainable products?

Yes, yes, of course. No -- and this is it's a really great question because, in our investor relations, the power of our own brands sometimes get lost as we talk about growth drivers such as trade and e-commerce and Screwfix. Our own exclusive brands, as we call them, are an absolute treasure for Kingfisher. We have a large organization that looks at customer needs. They assess customer journeys, where the pain points are, where the requirements are for different types of products or different types of innovation; feeds that into a design process; and then works with multiple vendors to manufacture before we then decide or in conjunction with deciding where those products will go within the group. So as I mentioned in the presentation, we're not prescriptive about we, "B&Q, you must sell this," or, "Castorama, you must sell that." We tailor our product development depending on customer needs; and we're very, very clear about that. Now obviously, with that end-to-end, if you like, participation in product development, we are able to innovate. And we're able to provide different types of functionality to reinforce sustainable credentials; and do it at a really good manufacturing and landed cost, which is obviously very helpful for our group margins. So for anyone who's a customer, please check out some of our brands in store. Some of the great ones include Erbauer, which is our power tools brand. You can see it at both B&Q and Screwfix. A big fan of -- personally a big fan of Verve, which is our gardening and outdoor brand as well. GoodHome paint is right up there in terms of both color palettes and also quality, so there's a -- there are -- we've really managed to penetrate into customers' hearts and minds with our brands, so really proud of them.

Okay. You did touch on this during the presentation, but it -- can you offer us any more detail on your store footprint? I know you were talking about the sort of the urban penetration. Where is the biggest opportunity to open more stores?

Yes, yes, I mean, absolutely. I mean, broadly speaking, it's -- to be simple: It's between Screwfix and Poland. So with Screwfix, we're at over 900 stores today in the U.K. and Ireland. And we'll -- the target is to hit over 1,000. On average, we've opened about 50 stores a year in the last 10, 12 years or so, so we're not far away from that target, but then again we're also doing some interesting things in terms of developing ultra-compact Screwfix formats which allow us to slot into high streets, as an example. Obviously Screwfix has opened up in France recently. We've got 24 stores open there today. There's potential, we think, to build a business that's at least the size of Screwfix in the U.K. The other one was Poland, where we're over 100 stores today. Poland is a developing country still, so there's still a lot of work to do to build out outside of the main cities. 100 stores means we're #1 in the country, but we see the opportunity for around 75 more stores over the next few years. So those are probably the 2 biggest drivers.

This one just in actually and perhaps loops back to what we were discussing earlier in terms of own brands because you've had good growth in online. And we've got marketplace which is gaining traction. As you scale up all of these product ranges and with more third-party products, are you concerned about any cannibalization?

Great question. I think the simple answer is no. We're not concerned about it. And we always take the view internally -- this is one of the cultural aspects that Thierry has brought in since he became CEO is that, if you fear cannibalization, you just won't innovate. You just won't do things. There will always be something that's holding you back, so -- and I think the reality is that, if you don't do it, someone else will, so no, we don't fear cannibalization. Anisha probably can give you a couple of interesting stats on how marketplace has evolved and what level of new customer and products attachment we've had in particular. But no, absolutely not concerned about it.

Yes. What we've actually seen is that it drives a lot more traffic to our website, Hannah. So with that broader offering, now over 1 million items on B&Q's website, that actually drives a lot of traffic, so we saw double-digit increase in traffic to B&Q website last year, for example. That's a lot of new customers as well. So that's not just existing customers, but we're attracting new customers. And 10% of those who buy marketplace products actually subsequently go on to buy our own products, so it's like a flywheel effect in terms of actually the more choices driving more customers not only to the marketplace but also to our own sales.

That sounds like good news to me. Okay, we're coming to the end. And we've got a couple more here, so if anyone else does want to submit any more, now would be a good moment. You touched on the big opportunity in terms of new store footprint, what's going to be Screwfix, obviously already having Castorama and Brico Dépôt in the same market. And you just said you're not afraid of cannibalization, so that sounds good. I think I know the answer, but what is the product overlap between them all now? And how are you going to juggle the balance between the 3 from an operational point of view?

Thank you, yes. I mean, when I first joined the business, actually the overlap between the businesses was growing. And ultimately the ambition in the previous life of Kingfisher was to -- was perhaps to sync up the 2 banners and make them the same and ultimately they'd sell the same thing. Since that point, we've -- actually have just embraced -- and it goes back to my opening comment. It -- we've embraced the diversity of the different customers that those banners serve. So Castorama is more for the general DIY customer. Brico Dépôt is perhaps more for the sort of value-oriented or discount-oriented customer. It tends to be Brico Dépôt is a bit more -- I want to say, a bit more pile it high, sell it cheap, but it's you get semi-professional DIYers in there who will buy 20 cans of paint or load up their vans with timber. It's that type of, that profile of customer; and much more refined product selection than Castorama. In terms of own brand, we're able, we've been able to really leverage own brand to really support that differentiation between the 2. So if I give you one live example: A couple of years ago, both Castorama and Brico Dépôt both sold a paint brand that was our own exclusive brand called GoodHome paint. And they both sold it and it was the same price, and you looked at it and you wondered. Well, what's the point of that really? Because it's the same product at the same price. In order to encourage and to -- really to play to Brico Dépôt's discount credentials, we took GoodHome paint out of Brico Dépôt. And we replaced it with a new own brand that we launched called Evalux, which -- similar qualities in terms of functionality and -- but a lower price point. And obviously, again, having that control over the product development cycle, you can innovate. And you can obviously control the costs a little bit better than you would with branded products, so we brought that in. And again that gives you a real example of how you can differentiate between banners. Screwfix adds a completely new leg to the home improvement proposition in France. It is a dedicated proposition for tradespeople, ultimately, most of what, if you think of Screwfix in the U.K., tends to be really catered to plumbers, electricians. The things that you buy typically will fit in the back of your car or on the back of an Uber motorcycle. So it's for repairs, for maintenance. We don't sell planks of wood, for -- as an example. And you can't buy an entire kitchen from a Screwfix. So we think they complement each other really well, in summary. And we're pretty excited about the opportunity for all 3 banners there.

Thanks. Clear, okay. We note you are cautious on the outlook for 2024 but more optimistic about '25. What is giving you; which indicators, which signs are giving you the most confidence that consumer spending is going to bounce back? Looking for a good, new story here at the end, Maj.

I'll leave that one to Anisha then.

Thanks, Hannah. So I think across the board. And there's quite a few indicators that we follow, and probably our audience looks at that as well. On the macro side, there are starting to show some green shoots. So you take the U.K. for example. You look at things like homebuyer inquiries, mortgage approvals, house prices. They're actually all showing signs of being pretty supportive for the housing market in the next couple of months. Even headline inflation today obviously has come down a long way in the last couple of months. So I think there is sort of optimism on the horizon that central banks might start cutting interest rates, for example, which will help the housing activity as well. The reason we're a little bit more cautious on 2024 is that we know that there's a lag between that housing market activity and that feeding through to home improvement sales. And typically, if you look at past cycles, that tends to be anywhere between 9 to 12 months of lag time, so these indicators that we're seeing today starting to improve leave us relatively cautious for this year, because we know 2023 was still difficult, but give us some signs of optimism for going into 2025. I think in Poland we alluded to confidence. They're already having improved -- inflation coming down, again interest rates already having been cut by the central bank, so similar signs of optimism in Poland. France is quite different in terms of the sentiment, so while the macro headlines don't actually look dissimilar in terms of inflation, interest rates, housing market is a little bit more subdued there. And we think that's largely to do with the sentiment still being so weak. So we still see signs of sort of the sluggishness and willingness to spend by consumers, and that's not just in our industry. That's actually across the board in retail. Other peers and other industries are reporting the same. And to us that's more linked to very low confidence, which, hopefully, will start to rise this year but is still subdued relative to history.

Thank you. A very helpful synopsis there at the end. Well, that is it for the questions, so that just leaves me to thank you both for your time today; our audience, for joining us. And we look forward to catching up with you both in due course.

Thank you very much, Hannah. Thank you, everyone, as well.

Thank you for having us.