One of the many nuances of evaluating performance for global companies comes with reconciling performance in different currencies without the impact of exchange rate fluctuations.  Luckily, the Consumer Edge GLOBAL and EUR platforms provide several tools allowing users to assess customer spend for both the reported and underlying local currency.  In today’s Insight Flash, we apply these tools to looking at Kingfisher’s (KGF-LON) pan-European home improvement business, assessing differences in spend growth adjusted and unadjusted for currency, comparing transaction growth, and looking at average ticket trends.

When analyzing a multinational company, it is important to be able to examine both the impact of currency and how a company’s local operations are performing without those currency effects.  For KGF-LON, volatility in the exchange rate between the Euro and the Pound can change the view of how the company’s Continental European stores are performing.  Across the company’s brands, those living in Continental Europe actually spent more than they had in the prior year in EUR in Summer 2021 – 0.9% more in July, 0.2% more in August, and 3.3% more in September.  However, currency conversion into the company’s reporting currency of GBP made it seem like they were spending -4.5% less, -5.2% less, and -2.7% less in those months.  Indeed, conversion to GBP would make the trends seem more negative than they actually were for these international stores for those months through August 2022. However, trends would have seemed more positive for the last three months of the year.  The CE platform provides spend in both local and reporting currencies in order to allow users to appropriately examine company performance from both perspectives.

Spend Growth by Currency

Note:  All brands; conversion to GBP on a daily basis; data captures transactions from those domiciled in Austria, France (where the company has stores), Germany, Italy, Spain (where the company has stores), and the UK (where the company has stores)

Looking at number of transactions instead of total spend is one way to see how different geographies are performing without currency becoming a factor.  Digging into transaction growth versus the first half of 2018 for all of KGF-LON’s brands, growth among Spanish shoppers has actually been seasonally strongest in the second half 2020 and 2021 among the three countries we track where KGF-LON has stores.  UK transaction growth was stronger in the first half of those years as well as in all of 2022.  In fact, for both halves of 2022, Spanish transaction growth has been the weakest tracked versus the beginning of 2018, sliding from 91% of 2018H1 levels in 2022H1 to 87% in 2022H2.  French transactions were stronger at 94% of 2018H1 levels in both halves.   

Transaction Growth by Geography

Note:  All brands

Transaction growth can’t tell the whole story for retail performance though.  Within a given country, customers may be buying more items on a trip or moving upmarket to higher-priced items.  CE provides average ticket metrics in local currency (as well as reporting currency) as a way to understand these dynamics.  For KGF-LON, Continental European customers have been increasing their spend per transaction steadily over time, while UK customers have been growing spend per trip much more slowly.  In Continental Europe, spend at KGF-LON brands in 2022 was the strongest it has been since 2018H1, with 24% growth from that period in H1 and H2.  In the UK, average ticket growth peaked during the pandemic with the 2020H1 average ticket 7% higher than the 2018H1 average ticket. Spend per transaction has trended lower since then, with 2022H2 only 3% higher than 2018H1.

Average Ticket

Note:  All brands; data captures transactions from those domiciled in Austria, France (where the company has stores), Germany, Italy, Spain (where the company has stores), and the UK (where the company has stores)