Good morning and welcome to Hornbach Holding's quarterly update call presentation on the first quarter of fiscal 2025-2026. My name is Antje Kelbert, Head of Investor Relations. Today at 7:00 A.M., we have already published our figures for the first quarter, comprising the period of March 1st until May 31st, 2025. Welcome and good morning also to our CEO and interim CFO, Albrecht Hornbach, who will be our host and presenter today and will later take your questions. Please note the entire conference call, including the Q&A session, will be recorded and made available with a transcript on the corporate website afterwards. Please also take note of the disclaimer, which is valid for the entire presentation and for the Q&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&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.
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 May 21st, 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 Nuremberg and Duisburg, both 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 Q1, we remain cautious with our guidance for the rest of the year. No 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 at the previous year's level. Let us now have a closer look at some of the Q1 results. As mentioned, group net sales in Q1 were up by 5.7%, mainly driven by HORNBACH Baumarkt AG'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 Q1 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 in the right direction. The geographic split did not change significantly, with slightly more than half of HORNBACH sales now coming from the eight European countries outside Germany. HORNBACH Baustoff 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 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 1.2 additional business days in the HORNBACH countries compared to the prior year period. I would also like to point out that sales growth in Q1 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 HORNBACH 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 0.6 percentage points. In Czechia, we make 38.6% of the market, 1.5% more than in the prior year period. 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 that we were able to benefit from the favorable weather conditions during this spring 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 e-commerce 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 HORNBACH Baumarkt showed a strong growth of 11.1%, resulting in an increased e-commerce share of 13.1% in Q1. Both direct delivery and click-and-collect developed positively, with approximately 12% and 8% growth respectively. With that, I would like to take a closer look at the cost and expense development in our P&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 35.4% 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 Q1 last year, based on a 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 0.4 percentage points compared to the prior year period. There were no significant non-operating items or adjustments in Q1. 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 inventories. Funds from operations increased slightly, mainly driven by the higher net income for the period. Capex summed up to EUR 48 million in Q1 compared to EUR 23 million 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 EUR 147 million, reflecting the already mentioned change in working capital. Let us now have a look at our balance sheet.
As of May 31st, 2025, Hornbach once again delivered a robust balance sheet. Compared to February 28th, 2025, the consolidated balance sheet slightly increased to EUR 4.7 billion. 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 Hornbach's successful development in the future. Our current guidance for the 2025-2026 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 2024-2025 and adjusted EBIT at the level of 2024-2025. However, given the good earnings performance in the first quarter of 2025-2026, adjusted EBIT in the upper half of the guidance range is currently likely. With that, I conclude my presentation and hand back to Antje Kelbert for the Q&A session.
Thank you, Albrecht, for guiding us through our numbers and your remarks. I now hand over to our operator, Bastian, to explain the technicalities of our Q&A session. Please go ahead.
Thank you, Antje.
If you wish to ask a question, please dial #key followed by the five on your keypad to enter the queue. If you wish to withdraw your question, please dial #key followed by the six on your keypad. I will pause for a moment. Just as a reminder, if you would like to ask a question, please dial #key followed by the 5 on your keypad. We have the first question coming from Volker Bossel from Baader Bank. Please go ahead.
Yeah. 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. 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?
Do you see a structural trend 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, we had the salary increases. Is that repeating again, or what do you want to give as a message by saying so? Last but not least, the third question would be, yeah, on current trading, how June developed. I mean, we have nice hot warm weather outside. This should be supportive, I guess. Yeah, to get your thoughts on that would be also very helpful. Thank you.
Okay. Thank you for the questions. Shall I answer now? First question concerned online sales.
I would guess we had a very strong peak of online sales during the COVID pandemic. After that, we got on the path of normalization, which means decreased online sales. I simply guess we have now reached the bottom and are on a normal increasing way of our online sale. In addition, it is 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 our product range gets broader for the customers and makes our web shop even more interesting. Guidance cost increases. Cost increases is mostly employee wages, but we have not to await a very big increase. Now we have the higher wages, which began in the end of the last year, and it takes some months until the basis is reached.
Trading, okay, we are now reporting Q1. We said Q1 was we have had a positive trading. This trend is still ongoing, and our trading is very sufficient in the moment.
Okay, Volker, does this answer your questions?
Can I answer?
Probably.
I was muted again, so now I'm muted. Yeah. Thank you very much for the explanations and all the answers.
Thank you, Volker.
Okay.
Please next.
The next question comes from Tilo Kleber from Warburg Research. Please go ahead with your question.
Yes. Hello. Good morning. Thanks for taking my questions. I found one follow-up question on the cost increases. For Q1, you mentioned an increase in operating expenses of 3.7%. Is this in the end the run rate we also should expect for the coming quarter? Cost increases 3%-4% due to expansion, IT projects, wage inflation?
My second question would be regarding Hornbach Baustoff Union. You also mentioned building materials were quite positive in Q1. Do you also expect maybe a kind of stronger recovery for the Hornbach Baustoff Union business in the coming quarters? These are my questions.
Thank you for these questions. I think the 3.7% which you mentioned, it is a wage increase which we have in the month of now, I think. We had it since September. We have to wait until September until we reach that basis. That is the main driver for increases, not other things. Concerning Hornbach Baustoff Union, I mentioned we had a turnover increase of 3.1% in this quarter.
We have the feeling that also in Baustoff Union, we have reached the depth of the valley and said this industry is slowly recovering, but the main effects we are awaiting for next year only.
Okay. Thank you. That is helpful.
Okay. Thank you.
The next question comes from Thomas Maul from DZ Bank. Please go ahead and ask your question.
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 is quite impressive. Do you actually have any internal targets for market share, or which level would you like to achieve in Germany? Second question, maybe you can comment a bit on the competitive situation in Austria. My impression is that it is a bit difficult to gain share in Austria.
Maybe you can elaborate a bit on what's going on in Austria. Thank you.
Okay. We are at a level in the Q1 of 15.6% market share in Germany now. Of course, we have no special targets in market share. We tend to deliver our customers with the best what we can do. Market share is an outcome of our normal operating. Of course, we are proud that market share is increasing, and this is a sign for our very good position in the industry and our leading position in operations efficiency. Austria.
We have as a second speaker, we have also Erich Harsch. He's CFO of Hornbach Baumarkt AG, and he's also supporting the questions regarding the specificalities of Hornbach Baumarkt. Please go ahead.
Hello and good morning. I think Austria is pretty similar to Germany in the development of the market share.
It's difficult because of the many competitors and the structure of the country. 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 have a new head of our business in Austria, Peter Eberther, who's responsible for since some months for the business. He's an Austrian, and I'm trusting that the development in Austria will also be on a good way.
Okay. Thank you. Helpful.
Okay. The next question comes from Ralph Marinoni from Kepler Cheuvreux. Please go ahead and ask your question.
Yes. Good morning, everybody. Two questions from my side. First, can you quantify the pre-opening costs of the new Duisburg store? Second question, which amount of CapEx can we assume for the full year considering another three store openings? I didn't understand right. Pre-opening cost of which special?
Of the Duisburg store, that must have been included in your Q1 results.
Okay. Yeah. Here, I must say that we do not disclose single store numbers. We cannot tell you especially pre-opening cost of a certain market, a certain store, which in this case should be Duisburg. I do not have this number here. Sorry about that. CapEx full year, yeah.
We have for the CapEx, we have given the indication that we will see our result above the level of 2024-2025, which has been around EUR 148 million.
Okay. Maybe it is hard to assume that we can multiply your CapEx of the first quarter with a factor of four.
It is not evenly spread through the quarters. However, as Albrecht said, we will not disclose them. Already, as you can imagine, the pre-opening costs have already been there last year.
As the name says, pre-opening, and we started the last fiscal year. It is a little bit, yeah, spread throughout different quarters and even throughout different fiscal years.
Okay. Thank you.
You're welcome.
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. Okay. As I can see, there are no more questions at this time. I would hand back to Antje Kelbert for any closing comments.
Yeah. Thank you very much for handing back and all your questions. Thank you, Albrecht, for guiding us through and Erich 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. 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.