Earnings call transcript: Hornbach’s Q1 2025 results show strong growth

Hornbach Holding VZO O.N. (HBH) reported a robust start to its fiscal year 2025/26, with notable improvements in net sales and adjusted EBIT. The company’s stock surged by 7.36% following the announcement, reflecting investor optimism about its performance and strategic initiatives. According to InvestingPro data, the company demonstrates strong financial health with an overall score of 2.52 out of 3, indicating robust operational performance.

Key Takeaways

• Net sales increased by 5.7% in Q1 FY 2025/26.
• Adjusted EBIT rose by 10.4%, reaching an 8.5% margin.
• E-commerce sales grew 11.1%, with a significant rise in direct delivery and click-and-collect services.
• The stock price increased by 7.36% following the earnings report.

Company Performance

Hornbach demonstrated solid performance in the first quarter of fiscal year 2025/26, with a 5.7% increase in net sales. This growth was supported by a strong performance in the e-commerce segment, where sales grew by 11.1%. The company’s marketplace strategy has expanded its product range, contributing to increased customer engagement and frequency. Hornbach’s expansion efforts included opening two new stores in Germany, further enhancing its market presence.

Financial Highlights

• Revenue: Increased by 5.7% year-over-year.
• Gross profit: Up by 5.3%.
• Gross margin: Slightly decreased to 35.2% from 35.4%.
• Adjusted EBIT: Improved by 10.4%, achieving an 8.5% margin.
• Free cash flow: Rose to €147 million.
• CapEx: €48 million, with 58% spent on land and real estate.

Market Reaction

Hornbach’s stock price rose by 7.36% to €97.70, following the earnings announcement. The stock’s performance reflects investor confidence in the company’s strategic direction and its ability to navigate the current economic landscape. The surge places the stock closer to its 52-week high of €106.8, indicating strong market sentiment.

Outlook & Guidance

Hornbach maintained its full-year guidance, expecting sales to be at or slightly above the previous year’s levels, with adjusted EBIT at the same level. Despite macroeconomic uncertainties, the company remains optimistic about its position in the market and anticipates being in the upper half of its EBIT guidance.

Executive Commentary

CEO Albrecht Thornbach stated, "We are well positioned to navigate the complex macroeconomic and geopolitical environment." He emphasized the company’s resilience and strategic focus, noting, "Our current guidance reflects ongoing macroeconomic uncertainties."

Risks and Challenges

• Macroeconomic uncertainties could impact consumer spending and market dynamics.
• Wage increases are a primary cost driver, potentially affecting profitability.
• The construction industry’s recovery is uncertain, which could influence demand for DIY products.

Q&A

During the earnings call, analysts inquired about the normalization of online sales post-COVID and the impact of wage increases on costs. The company highlighted its marketplace strategy as a key driver of online growth and noted that trading remains positive into Q2.

Full transcript - Hornbach Holding VZO O.N. (HBH) Q1 2026:

Antje Kebat, Head of Investor Relations, Hanbach Holdings: Good morning, and welcome to Hanbach Holdings quarterly update call presentation on the first quarter of fiscal twenty five twenty six. My name is Antje Kebat, Head of Investor Relations. Today at 7AM, we have already published our figures for the first quarter comprising the period of March 1 until 05/31/2025. Welcome and good morning also to our CEO and interim CFO, Albrecht Thornbach, who will be our host and presenter today and will later take your questions. Please note the entire conference call, including the q and a session, will be recorded and made available with a transcript on the corporate’s website afterwards.

Please also take note of the disclaimer, which is valid for the entire presentation and for the q and a session. To ask a question, please dial in for the telephone conference. Dial in numbers have been provided in your confirmation email. The operator will give further advice at the beginning of the q and a session at the end of the call. By pressing hash key five on your phone, you can join the queue to ask a question.

Now I’m delighted to hand over to you, Albrecht, to give us an overview of the last set of numbers. Please go ahead.

Albrecht Thornbach, CEO and Interim CFO, Hanbach Holdings: Thank you very much. Good morning, and a warm welcome from my side. Thank you for joining. We delivered a good performance in the first quarter of our current financial year. This is in line with what we already mentioned during our update on current trading at the investor and analyst conference on 05/21/2025.

Our net sales grew by 5.7% driven by favorable weather conditions during spring resulting in increased customer footfall. Additionally, sales benefited from two new recent store openings in Nurnberg and Stutzburg, in Germany. On a like for like basis, sales grew by 4.7%. These results are in line with our expectations as we already commented in our analyst and investor conference in May and underline our continued confidence in our robust and resilient business model and our relevance to our customers. Our gross profit increased alongside the already mentioned sales growth by 5.3%.

This resulted in a gross margin of 35.2%, slightly below the prior year period. Adjusted EBIT significantly improved compared to the same period last year. This was mainly driven by improved sales and gross profit improving our cost to sales ratios. Whilst we are very pleased with our results for q u one, we remain cautious with our guidance for the rest of the year. No changes changes here as macroeconomic uncertainties and a dampened consumer sentiment could still impact our business.

Therefore, we confirm our full year guidance as announced in May. We continue to expect sales at or slightly above the previous year’s level and adjusted EBIT as a previous year’s level. Let us now have a closer look at some of the q one results. As mentioned, group net sales in q one were up by 5.7%, mainly driven by Hamburg Baumark’s strong performance. Compared to last year’s quarter, we saw increased demand for gardening products and construction materials following the good weather in March, April, and May.

Customer frequency in q one developed positively with an increase of 4.2%, while average tickets also showed a slight upward trend of 1.1%. It is still too early to conclude that this is a lasting trend towards larger projects, but it is a step into the right direction. The geographic split did not change significantly with slightly more than half of Randberg Baumark sales now coming from the eight European countries outside Germany. Randberg Baustof union union subgroup, which, mainly caters to professional customers in the construction industry, also reported a sales growth of 3.1%. We anticipate that the construction industry in Germany has now bottomed out and that things should slowly start to improve again.

The most recent figures show a slight upward trend in order to in order intake and building permits. Now let’s turn to like for like sales growth. Generally, demand in most European countries benefited from warm and mostly dry spring weather. For the group, like for like growth was, as mentioned, 4.7% in total. Germany contributed a growth of 3.4%.

Other Europe, 5.9%. Especially in Luxembourg and The Netherlands, we saw strong like for like growth of nearly 11% each. Sales performance was partly driven on average one point two additional business days in the Hamburg countries compared to the prior year period. I would also like to point out that sales growth in q one has not been influenced by inflationary effects. Consequently, we have seen fewer volume growth as selling prices slightly decreased compared to the prior year period.

Let’s now have a look at our market share development. We continue to focus on expanding our market share in expanding our strong market position throughout Europe. In all Hamburg countries for which, GFK market share data is available, we managed to increase our footprint in the period from January to April 2025. In Germany, our largest market and, despite a highly competitive environment, our share has reached 15.6%, a plus of o point six percentage points. In Czechia, we make 38.6% of the market, 1.5% more than in the prior period prior year period.

And in The Netherlands, we gained 1.4 percentage points, now making 29.7% of the total market. In Austria and Switzerland, we also saw a positive development. This illustrates that our offering remains highly relevant to our do it yourself customers and certainly were able to benefit from the favorable weather conditions during this spring session session. Let me also remind you that compared to the pre COVID period, this is a tremendous development and strong achievement of our colleagues catering for our customers. Not only did we manage to grow in the time of the pandemic, we also defended market shares and improved them even further.

Let’s now jump to ecommerce development. Customer engagement across our interconnected platforms remains high, confirming that those are well established sales channels both in our do it yourself and do it for me offerings. E commerce sales of Randbach Baumark showed a strong growth of 11.1% resulting in an increased e commerce share of 13.1% in q one. Both directly delivery delivery and click and collect developed positively with approximately 128% growth respectively. And with that, I would like to take a closer look at the cost and expense development in our p and l.

Our gross profit increased by 5.3 percentage points mostly in line with the growth in net sales. Gross margin came in at 35.2% after 35.50.4% in the prior year period. This reflects as already mentioned a normalization of selling prices in the do it yourself sector. Let us now look at our selling and store expenses. While we are now seeing the full effect of increased wages in all countries we operate in, costs have risen slower than sales.

This leads us to the disproportionately positive development of adjusted EBIT. Overall, we improved our adjusted EBIT by 10.4% compared to q one last year based on the successful spring season combined with improved cost to sales ratios. With this, overall adjusted EBIT margin came in at a comfortable 8.5, an increase of over all point four percentage points compared to the prior year period. So there are no significant nonoperating items or adjustments in QU one. Let’s now turn to the cash flow statement.

Our cash inflow from operating activities increased significantly compared to the previous year, primarily driven by cash inflow from change in working capital. This is due to, among other things, lower utilization of the reverse factoring program, which was fully repaid in the first quarter as usual and to a reduction of inventory inventories. Funds from operations increased slightly, mainly driven by the higher net income for the period. CapEx summed up to €48,000,000 in q one compared to 23,000,000 in the same period last year. As planned, 58% was spent on land and real estate mainly for new stores, while the rest was attributed to store conversions and equipment as well as software.

Free cash flow improved to €147,000,000, reflecting the already mentioned change in working capital. Let us now have a look at our balance sheet. As of 05/31/2025, Handbach once again delivered a robust balance sheet. Compared to February 28, 2025, the consolidated balance sheet slightly increased to €4,700,000,000. The equity ratio was slightly up coming in at 45.5% remaining on a strong level.

All in all, our balance sheet underpins our robust financial position as well as the resilience of our business model. Before we open the floor to questions, I want to highlight our continued focus on strategic priorities, cost management, and sustainable growth through targeted investments and operational efficiency. With our strong private labels, everyday low price strategy, and commitment to sustainability, we aim to support customers, maintain market leadership, and deliver value to shareholders. In summary, we are well positioned to navigate the complex macroeconomic and geopolitical environment and capture medium and long term growth opportunities in the home improvement sector. That makes us very confident about HomePath’s successful development in the future.

Our current guidance for the 2526 financial year reflects ongoing macroeconomic uncertainties and subdued consumer sentiment. Therefore, we are currently confirming our original forecast published in May. We continue to expect net sales at or slightly above the level of 2425 and adjusted EBIT at the level of 2425. However, given the good earnings performance in the first quarter of twenty five twenty six, adjusted EBIT in the upper half of the guidance range is currently likely. And with that, I conclude my presentation and hand back to Angie Kelpad for Q and A session.

Antje Kebat, Head of Investor Relations, Hanbach Holdings: Thank you, Andreas, for guiding us through our numbers and your remarks. I now hand over to our operator, Bastian, to explain the technicalities of our Q and A session. Please go ahead.

Operator: Thank you, I will pause for a moment. Just as a reminder, if you would like to ask a question, please dial hash key followed by the five on your keypad.

: What’s that?

Operator: So we have the first question coming from Volker Bossel from Baader Bank.

Albrecht Thornbach, CEO and Interim CFO, Hanbach Holdings: Go ahead.

Volker Bossel, Analyst, Baader Bank: Thanks for taking my question. Good morning. Volker Bossel from Baader Bank. Congratulations on the good start into the new fiscal year. I would have three questions, please.

And the first question would be on online sales. You reported strong double digit growth here. Do you see any specific reasons or drivers for that growth? And then do you see structural trends towards online? Or is there any one off included also?

I would be interested to get your thoughts on that, please. The second question would be on your guidance. You also mentioned potential cost increases which might come. Do you have something special here in mind? Or what kind of cost increases you speak about last year with the salary increase?

Is that repeating again? Or yeah. What do we want to give as a message by saying so? And last but not least, third question would be, yeah, on on current trading, how June developed? I mean, we have nice hot warm weather outside.

It should be supportive, I guess. But, yeah, to get your thoughts on that, that would be also very helpful. Thank you.

Albrecht Thornbach, CEO and Interim CFO, Hanbach Holdings: Okay. Thank you for the questions. Shall I answer now? First question concerned concerned online sales. I would guess, know, we had a very strong peak of online sales during the con COVID pandemic.

And after that, we we got on the path of normalization, which which means decreased online sales. And I think, I guess, we have now reached the bottom and on a normal increasing way of our online sale. In addition, it’s worth to mention, I think that since some time, we also reported about that we are operating our marketplace, which might influence our online sales in a positive way because of our product range gets gets broader for the customers and makes our workshop even more interesting. Guidance cost increases. Okay.

Cost increases is mostly employee wages, but we have we have not await a very big increase. But now we we we have the higher wages which began in in the end of the last year, and it takes some months until the basis is is is reached. And trading, okay. We we are now reporting q one. We said q one was we have had a positive trading.

This trend is still ongoing and our trading is very sufficient in the moment.

Antje Kebat, Head of Investor Relations, Hanbach Holdings: Okay, Volker. Does this answer your questions?

Albrecht Thornbach, CEO and Interim CFO, Hanbach Holdings: Probably.

Volker Bossel, Analyst, Baader Bank: I was muted again, so now I’m unmuted. Yeah. Thank you very much for the explanations and all

Antje Kebat, Head of Investor Relations, Hanbach Holdings: that. Welcome.

Albrecht Thornbach, CEO and Interim CFO, Hanbach Holdings: Okay.

Antje Kebat, Head of Investor Relations, Hanbach Holdings: Well, please So

Operator: the next question comes from Thielo Klaibauer from Warburg Research. Please go ahead with your question.

Thielo Klaibauer, Analyst, Warburg Research: Yes. Hello, good morning. Thanks for taking my questions. I have one follow-up question on the cost increases. So for Q1, you mentioned an increase in operating expenses of 3.7%.

This is, in the end, the run rate we also should expect for the coming quarters. So cost increases 3% to 4% due to expansion IT projects, wage inflation. And my second question would be regarding Hornbark Bausch of UniJOHN. You also mentioned, yes, Building Materials were quite positive in Q1. So do you also expect maybe a kind of stronger recovery for the Hornbach Bostock new own business in the coming quarters?

These are my questions.

Albrecht Thornbach, CEO and Interim CFO, Hanbach Holdings: Thank you for these questions. I think the 3.7% which you mentioned, it’s a wage increase which we have in the month of no. I think Samsung. We we had it we had it since September, and we have to wait until September until we we reached that that set basis. And that’s the main driver for Mhmm.

Increases, not not other things. And

: Okay. Okay.

Albrecht Thornbach, CEO and Interim CFO, Hanbach Holdings: Okay. And concerning, I I mentioned we had we had a turnover increase of of 3.1% in this quarter. And we have the feelings that also in Bastogne, we have reached the depths of the valley and said this industry is slowly recovering, but the main effects we are awaiting for next year only.

Thielo Klaibauer, Analyst, Warburg Research: Okay. Thank you. That’s helpful.

Albrecht Thornbach, CEO and Interim CFO, Hanbach Holdings: Okay. Thank you.

Operator: So the next question comes from Thomas Mowel from Dietzet Bank. Please go ahead and ask your question.

Thomas Mowel, Analyst, Dietzet Bank: Yes. Good morning. Thanks for taking my questions. I got two. Firstly, with regard to Germany, you reached a market share of above 15% in Germany now.

That’s quite impressive. Do you actually have any internal targets for market share? Or which level would you like to achieve in Germany? And second question, maybe you can comment a bit on the competitive situation in Austria. My impression is that it’s a bit difficult to gain share in Austria.

So maybe you can elaborate a bit on what’s going on in Austria. Thank you.

Albrecht Thornbach, CEO and Interim CFO, Hanbach Holdings: Okay. We are at a level in the q one of 15.6% market share in Germany now. And, of course, we have no special targets in market share. We we we tend to deliver our customers with the best with the best what we can do, and market share is an outcome of our normal operating. But, of course, it’s we are proud that market share is increasing, and and this is a sign of for our very good position in the industry and our leading position in a in an efficient in operations efficiency.

Austria.

Antje Kebat, Head of Investor Relations, Hanbach Holdings: So we have as a second speaker, we have also Eric Haj. He’s CFO of Handwerk, Baumark AG, and he’s also supporting the questions regarding, the specificities of Handwerk Baumark. Please go ahead.

Eric Haj, CFO, Handwerk Baumark AG: Hello, and good morning. I think Austria is pretty similar to to Germany in the development of the market share. It’s difficult because of the many competitors and the structure of the country, but we are on a very good way, and we think we can develop also in Austria in a good way. As you know, maybe we we have a new head of our business in Austria, Peter Ebertor, who’s responsible for since some months for the business. And he’s an Austrian, and I’m I’m trusting that the development in Austria will also be on a good way.

Thomas Mowel, Analyst, Dietzet Bank: Okay. Thank you. Helpful.

Albrecht Thornbach, CEO and Interim CFO, Hanbach Holdings: Okay.

Operator: So then the next question comes from Ralf Marinoni from Corinne. Please go ahead and ask your question.

: Yes. Good morning, everybody. Two questions from my side. First, can you quantify the preopening costs of the new new store? And second question, which amount of CapEx can be assumed for the full year considering another three store openings?

Albrecht Thornbach, CEO and Interim CFO, Hanbach Holdings: Mhmm. I didn’t understand right. Preopening cost of which special?

: Of the new office of this bookstore that must have been included in your coupon results. Okay. Yeah.

Albrecht Thornbach, CEO and Interim CFO, Hanbach Holdings: Yeah. I I must say that we do not disclose single store numbers. So we we cannot tell you, especially pre opening cost of of certain market, a certain store, which in this case should be this work. And I don’t have this number here. Sorry about that.

And the CapEx full year, Gamma, don’t know what do.

Volker Bossel, Analyst, Baader Bank: I believe it.

Antje Kebat, Head of Investor Relations, Hanbach Holdings: Yes. So we have, for the CapEx, we have giving the indication that we will see ourselves above the level of 2024, 2025, which has been around 148,000,000.

: Okay. So that’s maybe fair to assume that we can multiply your CapEx of the first quarter with a factor of four.

Antje Kebat, Head of Investor Relations, Hanbach Holdings: Yes. It’s not evenly spread through the quarters. However, as Alves said, we don’t disclose them. And already, as you can imagine, the the, preopening costs have already been, there last year. So as the name says, preopening, and we

Volker Bossel, Analyst, Baader Bank: used Okay.

Antje Kebat, Head of Investor Relations, Hanbach Holdings: The last fiscal year. So it’s not it’s a little bit, yeah, spread throughout different quarters and even throughout different fiscal years.

: Mhmm. Okay. Thank you.

Antje Kebat, Head of Investor Relations, Hanbach Holdings: You’re welcome.

Operator: So at this moment, there are no further questions in the queue. As a short reminder, if you would like to ask a question, please dial the hash key followed by the five to get into the queue.

: So

Operator: as I can see, there are no more questions at this time. So I would hand back to Anja Kalbert for any closing comments.

Antje Kebat, Head of Investor Relations, Hanbach Holdings: Yeah. Thank you very much for for handing back and all your questions. Thank you, Albrecht, for guiding us through and Ed for answering the questions. If you have some further questions after the call or would like to discuss any further topic, please do not hesitate to get in touch with the investor relations team so we are available. We also would like to invite you to meet us at the upcoming capital market events throughout the coming weeks, especially in September after the summer break.

You will find an overview of our conferences and IR activity at the end of the presentation and also, most recent on our website. So thank you very much for your interest this morning, and have a pleasant summertime. Enjoy your own outdoor and gardening projects, and we hope to meet you soon in person. Thank you very much, and goodbye. Thank you.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.