Investor Event November 2003

Transcription

1 Investor Event November

2 Gerry Murphy CEO 2

3 Ian Harding Director of Communications 3

4 Today s agenda Castorama Brico depot 12:15 - Lunch Atrium B&Q Asia 14:00 Store visits 19:30 - Aperitifs 20:00 - Dinner 4

5 The information contained in this presentation is not an invitation to invest in the shares, or any other products or services or otherwise deal in these or enter into a contract with Kingfisher plc or any other company. The information provided should not be relied upon in connection with any investment decision. The past performance of Kingfisher plc or any other company referred to in the presentation cannot be relied upon as a guide to its future performance. The price of shares and the income derived from them can go down as well as up and investors may not recoup the amount originally invested. Certain statements made in this presentation are forward-looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance, express or implied, by the forward-looking statements. Factors that might cause forward-looking statements to differ materially from actual results include, among other things, legal transactional, regulatory and economic factors, as well as Kingfisher plc s ability to implement cost savings and revenue-enhancing measures. Other factors include Kingfisher plc s ability to successfully add new and planned store space and to continue to implement cost and cash controls. Subject to the Listing Rules of the UK Listing Authority, Kingfisher plc assumes no responsibility to update any of the forward-looking statements contained herein.

6 Philippe Tible CEO 6

7 Investor Event November

8 External Market Evolution Market Home Improvement market is healthy, annual growth 98-02: +3,7% (Total market), +5,4% (Sheds) Home ownership in France: 55% vs UK: 68% Customers Increasing need for "personalisation" of housing : to live in a fashionable environment, a family and personal space in which to blossom 30% growth in household spending on Decorative & Showroom in 3 years Competitors: larger spectrum Development of Discounters Evolution of competitors towards softer concepts Regulation Increasing restrictions on the development of retail space leading to a faster development of small and medium box retail concepts Sources: Unibal, Insee, LSA Castorama strategy must respond to these changing consumer needs and market trends 8

9 Group market share in France up 2.9% in 5 years Castorama share decline primarily due to store transfers to Brico Depot Market share 6 13 Castorama strores Transferred to BD 20,3% 17,4% 16% 13,4% 18,5% 16,3% 13,6% 19% 19,2% 16,2% 15,5% 14% 14,3% Kingfisher France 19,3% 14,7% 14,6% 14,9% 14,4% Kingfisher France Leroy Merlin Castorama 6,6% 1,4% 7,6% 2,2% 8% 2,8% 8,8% 5,1% 5,4% 5,5% 5,5% 3,6% 8,8% 5,9% 4,6% 8,8% 6,2% 5,9% Bricomarché Mr Bricolage Brico Dépôt Market share of brands in Home Improvement market, incl Garden in Supermarkets, excl. Specialist Garden stores Source : Unibal Company financials 9

10 Financial Overview 2002/03 Annual Growth 1999/ /03 % Growth H1 03/04 Total Sales 2,190M 1,1% 3,1% LFL Sales 1,0% 1,9% EBIT 176M (2,2%) 15,7% UK GAAP 10

11 Priorities & Levers of Growth Priorities Levers of Growth Help our customers change their living environment more frequently Evolution of Offer Centralise product flows Supply Chain Make our products & solutions accessible to the largest number of customers Have stores which are adapted to their environment with common principles Price Store Investment Programme Have an open culture, closer to stores, empowered to implement locally Organisation 11

12 Priorities & Levers of Growth Priorities Levers of Growth Help our customers change their living environment more frequently Evolution of Offer Centralise product flows Supply Chain Make our products & solutions accessible to the largest number of customers Have stores which are adapted to their environment with common principles Price Store Investment Programme Have an open culture, closer to stores, empowered to implement locally Organisation 12

13 Patrick Chorein Commercial Director 13

14 Evolution of Offer Status & Ambition Opportunity to increase range on certain families of product (entry-level and high-end) Opportunity to increase the rate of renewal of certain product ranges in line with market developments Reinvigorate the Offer in higher growth categories, through increased choice and rate of renewal 14

15 Evolution of Offer Showroom Decorative Building Hardware Garden 15

16 Evolution of Offer Action Plan Decorative Increased breadth in lighting range Development of coordinated ranges Creation of Shops within a Shop in lighting, paint and wall coverings Build on strong ranges Showroom Increase the rate of change of collections by developing new fashion & design-led products Develop customer service, delivery and installation Increase density of product offer e.g. : bathroom accessories, sink, tiling, showers Reinvigorate the offer and merchandising for kitchens 16

17 Evolution of Offer Action Plan Garden Develop house and garden plants Enhance our positioning in garden furniture, including exclusive products Hardware Space allocation on product families with strong margins Store within a store for power tools and heating 17

18 Evolution of Offer Action Plan Building Optimisation of timber range Increase breadth of flooring, paving and chimneys 18

19 Evolution of Offer Showroom Decorative Building Hardware Garden 19

20 Evolution of Offer Action Plan Breadth of range Systematic presence of entry price products on most pertinent product families Positioning of own-brand products within price hierarchy Development of high-end on pertinent product families Increase special order range to further increase choice Help our customers change their living environment more frequently 20

21 Priorities & Levers of Growth Priorities Levers of Growth Help our customers change their living environment more frequently Evolution of Offer Centralise product flows Supply Chain Make our products & solutions accessible to the largest number of customers Have stores which are adapted to their environment with common principles Price Store Investment Programme Have an open culture, closer to stores, empowered to implement locally Organisation 21

22 Tyson Kay Director of Supply Chain 22

23 Supply Chain Invest in the Supply Chain to achieve business objectives Improved Range and Event Management Increased Supplier Performance Improved Inventory Availability Optimised Logistic Network Significant Reduction of In-Store Complexity Augment systems capability 23

24 Supply Chain Action Plan (I) Range Management Assure core range in all stores Roll out standard merchandising principles Achieve a step improvement in range change capability Event Management Reinforce process to assure best in class planning and delivery 24

25 Supply Chain Action Plan (II) Increased Supplier Performance Set clear performance targets, engage suppliers Enhance supplier assessment and development capability Understand total acquisition costing, place suppliers in right delivery channel Improved Inventory Availability Reinforce central replenishment and inventory management function Simplify and streamline the procurement process Improve reliability and control of reference file management 25

26 Supply Chain Action Plan (III) Optimised Logistic Network Implement tactical actions to optimise current network Develop and implement plan to achieve optimal network 26

27 Supply Chain Product Flow Delivery Channel Direct Volume to Store Warehouse Volume to Store Cross Dock Volume to Store Now 65% 17% 18% Goal 20% 35% 45% 2006 Number of Deliveries per store, per day Cross Dock Warehouse 27

28 Supply Chain Action Plan (III) Optimised Logistic Network Implement tactical actions to optimise current network Develop and implement plan to achieve optimal network Significant Reduction of In-Store Complexity Simplify administrative burden Reduce physical workload for stores More time for selling activities Augment systems capability Roll out of JDA (Reference File management) Implementation of Intactix (Planogrammes) Optimisation of our Supply Chain to enable a more efficient commercial organisation 28

29 Philippe Verhasselt Operations Director Southem France 29

30 Priorities & Levers of Growth Priorities Levers of Growth Help our customers change their living environment more frequently Evolution of Offer Centralise product flows Supply Chain Make our products & solutions accessible to the largest number of customers Have stores which are adapted to their environment with common principles Price Store Investment Programme Have an open culture, closer to stores, empowered to implement locally Organisation 30

31 Castorama is number 1 in France on overall «Brand Capital» 8,30 8,20 8,10 8,24 8,24 8,23 8,23 8,19 8,13 8,00 7,90 7,90 7,89 7,81 7,80 7,70 7,70 7,67 7,60 7,50 INFORCO Study: Inforco Image of Home Improvement Stores Castorama Mr Bricolage Leroy Merlin Weldom OBI Point P BHV Bricorama Brico Dépôt Catena Brico Marché

32 But Price Perception has been poor historically Rank of competitors on " price perception " Brico dépôt Leroy Merlin Bricomarché Mr Bricolage Castorama Ensure Castorama is Competively Priced INFORCO

33 Price Action Plan Ensure Castorama is competitively priced, by reinvesting some of the gains from 'Strategic Supplier Management' programme Reinforcement of entry priced products Reinforcement of price through volume product presentation Price reductions on products with high elasticity All year round competitive prices on best sellers Strong product promotion & communication 33

34 Priorities & Levers of Growth Priorities Levers of Growth Help our customers change their living environment more frequently Evolution of Offer Centralise product flows Supply Chain Make our products & solutions accessible to the largest number of customers Have stores which are adapted to their environment with common principles Price Store Investment Programme Have an open culture, closer to stores, empowered to implement locally Organisation 34

35 Store Investment Programme The existing store network profile is mixed Store Age (average 16) Store Size (m²) 0-5 years , years 8 5-8, years , years 44 10, > 25 years 10 Total 105 Total

36 Store Investment Programme Action Plan Site Town or Commercial Centre Sales Catchment Area Market Share Level of competition Action Types Standardisation Revamp Revitalisation Relocation 36

37 Store Investment Programme Action Plan A store investment programme with 4 levels of spend stores stores stores stores Standardisation Revamp Revitalisation New Store/ Relocation Key Actions : Key Actions : Key Actions : Key Actions : Return stores to standard: : Ensure best-sellers in place Clear up entrance and podium (power aisle) Clear stores of old and unsaleable stocks Standardisation PLUS Selective merchandising: Store in a Store in key areas Standardisation of signage Selective addition of new product categories Complete refurbishment of store : Addition of all new product categories Revised allocation of selling space Revised merchandising standards Relocate to increase selling space : On same site to optimise the store for its market On a new site to obtain better visibility or a catchment area with higher potential New stores 15 Authorisations in planning Cost per store: k Cost per store: 0,8-2 M Cost per store: 2-5 M Cost per store: 9 13 M * *excl land 37

38 Priorities & Levers of Growth Priorities Levers of Growth Help our customers change their living environment more frequently Evolution of Offer Centralise product flows Supply Chain Make our products & solutions accessible to the largest number of customers Have stores which are adapted to their environment with common principles Price Store Investment Programme Have an open culture, closer to stores, empowered to implement locally Organisation 38

39 Organisation Action Plan A more integrated organisation CEO Commercial HR Finance & Development 2 Ops Directors Merch. Marketing Decorative Showroom Building Supply Chain Hardware Garden No change New appointment during 2003 Process Services Internal appointment during

40 Organisation Action Plan Northern France - 7 regions Paris No change New appointment during 2003 Internal appointment during 2003 Southern France - 6 regions 40