Kingfisher Investor Event Presentation 2003 (Castorama)

Transcription

Investor Event
November 2003
1
Gerry Murphy
CEO
2
Ian Harding
Director of Communications
3
Today’s agenda
Castorama
Brico depot
12:15 - Lunch – Atrium
B&Q Asia
14:00 Store visits
19:30 - Aperitifs
20:00 - Dinner
4
“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. ”
Philippe Tible
CEO
6
Investor Event
November 2003
7
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
Castorama strategy must respond to these
changing consumer needs and market trends
Sources: Unibal, Insee, LSA
8
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
Castorama strores
Transferred to BD
13
20,3%
18,5%
19%
19,2%
19,3%
Kingfisher France
17,4%
16%
13,4%
16,3%
13,6%
16,2%
14%
15,5%
14,3%
Leroy Merlin
Castorama
14,7%
14,9%
14,6%
14,4%
8,8%
8,8%
Bricomarché
6,2%
Mr Bricolage
5,9%
Brico Dépôt
Kingfisher France
8,8%
7,6%
6,6%
5,1%
5,4%
8%
5,5%
5,5%
5,9%
4,6%
2,2%
2,8%
3,6%
1,4%
1997
1998
1999
2000
2001
2002
Market share of brands in Home Improvement market, incl Garden in Supermarkets, excl. Specialist Garden stores
Source : Unibal 2003 + Company financials
9
Financial Overview
Annual Growth
Total Sales
2002/03
1999/00-2002/03
€2,190M
1,1%
3,1%
1,0%
1,9%
(2,2%)
15,7%
LFL Sales
EBIT
UK GAAP
% Growth
H1 03/04
€176M
10
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
Price

Have stores which are adapted to their
environment with common principles
Store Investment Programme

Have an open culture, closer to stores,
empowered to implement locally
Organisation
11
Priorities
Levers of Growth

Evolution of Offer

Supply Chain

customers
Price

Organisation
12
Patrick Chorein
Commercial Director
13
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
Evolution of Offer
Showroom
Decorative
Building
Hardware
Garden
15
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
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
Evolution of Offer
Action Plan
• Building
– Optimisation of timber range
– Increase breadth of flooring, paving and chimneys
18
Evolution of Offer
Showroom
Decorative
Building
Hardware
Garden
19
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
20
Priorities
Levers of Growth

Evolution of Offer

Supply Chain

customers
Price

Organisation
21
Tyson Kay
Director of Supply Chain
22
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
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
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
Supply Chain
Action Plan (III)
• Optimised Logistic Network
– Implement tactical actions to optimise current network
– Develop and implement plan to achieve optimal network
26
Supply Chain
Product Flow
Delivery Channel
Now
Goal
Direct Volume to Store
Warehouse Volume to Store
Cross Dock Volume to Store
65%
17%
18%
20%
35%
45%
45
5
Number of Deliveries per store, per day
2006
2003
Cross Dock
Warehouse
27
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
Philippe Verhasselt
Operations Director Southem France
29
Priorities
Levers of Growth

Evolution of Offer

Supply Chain

customers
Price

Organisation
30
Castorama is number 1 in France on
overall « Brand Capital »
8,30
8,24
8,24
8,23
8,23
8,20
8,19
8,13
8,10
8,00
7,90
7,90
7,89
7,81
7,80
7,70
7,67
7,70
7,60
7,50
a
e
in
m
lag
e rl
do
am
l
r
o
M
e
c
o
i
W
st
Br
roy
Ca
Le
Mr
I
OB
int
Po
P
t
é
a
V
pô
ma
é
rch
ten
a
BH
r
a
a
D
o
C
M
ic
ico
Br
ico
Br
r
B
INFORCO Study: Inforco – Image of Home Improvement Stores 2003
31
But Price Perception has been
poor historically
Rank of competitors on " price perception "
0
1
Brico dépôt
2
Leroy Merlin
3
Bricomarché
4
5
6
Mr Bricolage
7
8
9
Castorama
10
2000
2001
2002
2003
Ensure Castorama is Competively Priced
INFORCO 2003
32
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
Priorities
Levers of Growth

Evolution of Offer

Supply Chain

customers
Price

Organisation
34
The existing store network profile is mixed
Store Age (average 16)
Store Size (m²)
0-5 years
16
0-5,000
17
5-10 years
8
5-8,000
16
10-15 years
27
8-10,000
23
15-25 years
44
10,000+
49
> 25 years
10
Total
105
Total
105
35
Action Plan
Site
Town or
Commercial Centre
Sales
Catchment
Area
Market Share
Level of
competition
Action Types
Standardisation
Revamp
Revitalisation
Relocation
36
Action Plan
A store investment programme with 4 levels of spend
40-50 stores
20-30 stores
10-20 stores
20-30 stores
Standardisation
Revamp
Revitalisation
New Store/
Relocation
• Key Actions :
• Key Actions :
• Key Actions :
• Key Actions :
• Return stores to standard: :
• Standardisation PLUS…
• Complete refurbishment
of store :
• Ensure best-sellers
in place
• Relocate to increase selling
space :
• Selective merchandising:
• Clear up entrance
and podium (power aisle)
• Clear stores of old
and unsaleable stocks
• Store in a Store in
key areas
• Standardisation
of signage
• Selective addition of new
product categories
Cost per store:
80 - 200 k€
Cost per store:
0,8 - 2 M€
• Addition of all new
product categories
• On same site to optimise
the store for its market
• Revised allocation
of selling space
• On a new site to obtain
better visibility or a
catchment area with
higher potential
• Revised merchandising
standards
• New stores
• 15 Authorisations in planning
Cost per store:
2 - 5 M€
Cost per store:
9 – 13 M€*
*excl land
37
Priorities
Levers of Growth

Evolution of Offer

Supply Chain

customers
Price

Organisation
38
Organisation
Action Plan
CEO
A more integrated organisation
Commercial
HR
Finance &
Development
2 Ops Directors
Merch.
Marketing
Decorative
Showroom
Supply Chain
Building
Hardware
No change
Garden
New appointment during 2003
Process
Services
Internal appointment during 2003
39
Organisation
Action Plan
Northern France - 7 regions
Paris
No change
New appointment during 2003
Internal appointment during 2003
Southern France - 6 regions
40