Good morning, everyone, and welcome to the Howden's Results for the first half of twenty nineteen. Thank you for taking the time to join us here in the room or to listening on the webcast. In addition to Mark Robson and me, Andy Witz, COO of Trade and Rob Fenix, CEO of Supply are both here. I'll begin with my perspectives on the first half of twenty nineteen and our plans for the rest of the year. Mark will then review our financial performance for the period.
I'll then sum up, and we'll take questions. It's been a positive half for Howdens. Both revenue and gross margin increased in profitability improved with operating profit increase at a higher rate than revenues. This in part reflected the timing of the price increase, which, this year, was implemented in January as compared with last year in April and maintenance of depot margin discipline, which we exhibited in the second half of last year. In the first half of twenty nineteen, we found a more profitable balance between volume and price as compared with the first half of last year when a significant recent volumes came at some cost to margin.
At the same time, we've continued to make investments in the business. I'll talk about these in particular Depper openings, format developments, new product introductions, and organizational structure in a moment. But first, I'd like to talk about our customers. Our overall customer base in the period was stable at around 470,000 trade and cash accounts. These two areas of focus were to improve our customer loyalty and the returns from our customer acquisition program.
Sales per customer increased as total transactions and total spend grew, with our core customers buying more kitchens and spending more with us. With broadly the same number of new accounts as in the comparable period last year, new customer spend increased significantly as did profit per new account, reflecting lower acquisition costs. I believe these results show that Highlands knows its objective to help our trade customers achieve exceptional results from their customers and for them to profit from doing so. When our customers succeed, we succeed. Our model is a powerful combination of locally empowered depot management teams served by a dedicated supply chain which is both cost effective and critical to the success of our in stock offer.
A key feature of heightened success is that we're trade only. Building trusted relationships with trade customers is central to everything we do. We have continued to hold our trade customer feedback sessions regularly, which enable us to identify any areas in which we need to improve our offer. Over 1000 of our customers have now attended these sessions, which show that our builders appreciate that we're listening to them. They view the relationship as a business partnership, so it's in their interests to invest their time to help us make it even easier for them to serve their customers.
We've introduced a number of initiatives with the potential to increase volumes and profits across the business, based around our core building blocks of trade service and convenience trade value and product leadership. I will focus on the initiatives I went through at the 2018 results presentation in February, which were evolving our depot model to use space more efficiently and to create the best depot environment in which to do business with to support our customers. Improving range management to help customers buying decisions and to access supply chain benefits and using digital to raise brand awareness to support the business model and to free up time for depot staff and customers to use more productively. All this together with our plans to develop our operation in France by way of a city based approach. Depo evolution.
During the first half, we progressed our testing of a new depot format aimed at creating the best environment in which to do business with our customers no material change to the fit out costs of a new depot. Through new vertical racking in the warehouse section of the depot, we believe that there are ways to make base utilization improvements with the potential to make productivity gains from reduced picking times. This format also provides the opportunity to reallocate space, providing a more open front area to bring depot staff closer to customers. Improved both the visibility and the standard of our design facilities, and nearly double the space available to wider range of kitchen displays. There is also space for a small goods picking area behind the counter with an improved everyday range of essential items, including hardware.
As a way of encouraging footfall and therefore, incremental kitchen sales. In addition to the depots opened or refurbished in the new format, there are further 45 depots that have been reracked without further modifications, which means that we now have a total of 88 depots with vertically wrapped product representing approximately 12% of the current estate. In the 1st 6 months, we've opened 14 new depots, including 5 in Northern Ireland, all in the new format. Depots opened up in the second half will also be in the new format. In total, we are on track to open around 40 depots in the UK in 2019, including the 5 that we've opened in Northern Ireland.
The improved densities offered by reracking vertically also enables us to put our full offering into a smaller space of around 6000 square feet. We expect to open around 16 smaller footage depots this year, including the 4 opened in the first half. With the new smaller sized depots, the number of UK depots could potentially reach around 850. As I explained at the 2018 results presentation, we're also testing to understand the rollback opportunity in the existing depot as state. We initially converted 3 older depots, Park Royal, 1995 from the business opened, swansea and Gilford the year after.
In 1996. These have been trading in the new format for several months, and Andy and I are pleased with the early feedback that we're getting from both the depot teams and the customers. We are on track to convert 8 more existing depots by the end of September. We are trialing several ways of doing this with different capital spends so that we can continue to learn how best to apply this opportunity to the existing depot estate. We will then trade these 11 depots through period 11 before drawing any conclusions to the sort of returns that we can expect.
Range Management New Kitchens each year represent a significant portion of sales as the product's life cycle shorten. In the 1st 6 months of the year, we introduced 8 new kitchen ranges, which are performing well. These ranges are characteristic of the trends we're seeing for straight lines and modern kitchens, which just accentuate the sense of space contrasting colors and cleaner look in shaker style kitchens. And MAP Textures that benefit from the latest industrial technological advances that prevent fingerprint marks. During the period, we updated find our mid and premium ranges.
Extended our worktop range by 9 light colored laminate worktops along with 3 new solid surface workshops to complement the increasing number of dark kitchen colors. We've introduced 25 Lemono appliances adding new technologies in cooking, laundry, and dish washing products, while strengthening our core lemona oven choice with the introduction of a new low price price point fan oven. We strengthened the La Mona brand with, through the introduction of a 3 year guarantee, From the hardware lines we are trialing, we have tested, we have selected around 250 of the fastest sellers from that range for a full rollout across the estate. And we've continued to support our customers by introducing pre finished internal doors across different styles so helping them save time in setting them. In the second half, we plan to introduce 4 more new kitchen ranges in time for the peak period 11 trading weeks, making the total of 12 new kitchens for the year.
Managing the number of kitchen ranges efficiently is crucial for both best availability, which is highly valued by our customers and profitability. And we intend getting back to the discipline of fewer, deeply stopped higher performing ranges. A key part of this is the timely discontinuation of underperforming ranges in the management of clearance from the business. In the first half of this year, 15 ranges have been cleared from the business and a further 6 will be cleared by the end of the year. Making a total for this in ranges, which we think is an appropriate number for the the business into 1 single commercial structure organized by categories.
This structure provides clear accountabilities for ranging decisions and the accessing of supply chain benefits. The changes will reduce, remove duplication of effort, ease communication and bring our commercial team closer to the depot managers. Through this structure, we aim to ensure that the business is well planned at least 18 months out with our suppliers, that we are being offered innovative product first and that we are being offered that we are offering the best value to our customers. Digital. We see Digital as a means to reinforce the Highlands model and the strong local relationship between Depots their builders and, are we're building our digital capability with 3 objectives.
To increase builder and consumer awareness of hide ins to help our customers sell the hide ins product, to improve the communication between hide ins tradespeople and their customers, streamline improve operating processes, thereby freeing up time for depot staff and customers to use more productively. In the first half, our new web platform, which can be viewed on desktop, tablet and smartphone and offers customers improved search and information as moveshydens.com into more prominent positions, raising brand awareness with consumers. Huddings.com impressions and search results has increased eightfold. Visits to the site has seen growth in traffic of 42% year on year. The contacting of Depots through the website has increased by 30%.
We have also completed a program to enrich product content and make the products around 80% of the visitors are now entering the site via the product pages rather than the homepage. Views of underrepresented, but in key categories, key product categories have increased, for example, use of hardware increased by 50%. Refining Style and Product Select is now easier enabling a more focused discussion of consumers' needs with their builders and our designers. In the second half of this year, we'll be making further improvements to our digital offering in line with our aim to put a trades person's local depot in their pocket. We will be testing a secure customer area customer only area of the website where builders can manage their accounts and interface more efficiently with their EPO and vice versa.
Customers will be able to view their credit details and make payments and access account details and invoices at any time. We will also be testing more efficient account opening process for new trade customers. International. In February, I explained why we believe there's potential for a viable business based in France. Since then, we've opened a new depot in June near Versailles.
We expect to open at least 4 more in the target areas this year, That'll be 3 Ram Paris and 1 in Lille. We have completed the rebranding of our international business from Houda to Howdens, which should enable the business to gain advantage from the UK brand equity, online search reputation, and business efficiencies. We've appointed a French national to lead our city based business strategy in France. We've completed the closure of our operations in Germany and the Netherlands with closure costs being in line with our expectations. Thank you very much for listening.
Mark will now take you through the interim results 2019, following
Thank you, Andrew, and good morning everyone. Reviewing the financials for the first half of the year, let me start by looking at some of the headline numbers from the income statement moving from left to right on the top row to begin with. As you can see, Haven Joinery's UK revenue rose by 1,000,000 to 1,000,000 a 5.5% increase on 2018. Group sales also increased by 5%. Gross profit rose by 1,000,000 percent was up from 61.3 percent in 2018, following a price increase in January 2019.
Operating profit was up by 1,000,000 to 1,000,000 as a result of a million increase in operating costs. These costs were impacted and by continued investment across the business. This included new depots, digital, and additional depreciation. The closure of our Dutch and German operations also impacted operating costs. Now, moving down to the 2nd row with net interest income and other finance charges broadly flat, there was a profit before tax of 1,000,000 dollars, $9,000,000 higher than in 2018.
Looking at cash flow in the first half of the year, this included share repurchase expenditure of 1000000 capital expenditure of 1000000 and a 1000000 contribution to the pension scheme. Overall, we had a net cash outflow of 1,000,000 and ended the period with million of net cash. I'll now go into some of the detail behind the headline numbers Let me start by talking about revenue, Howden's UK turnover of 1,000,000 increased by 5.5% on a total basis and was up 3.4% on the same depot basis. In Continental Europe, turnover of 1,000,000 was down by 1,000,000 as a result of the Dutch and German depot closures. Sales in our French and Belgian depots rose by 4% in euros.
Let me now from 1000000 in 2018. Gross profit rose by 1,000,000 This is the net effect of several features as shown in the chart on the right hand side If we bridge from 20 eighteen's gross profit of 1,000,000, there was a benefit of 1,000,000 which reflects the impact of The small fall in volumes and mix changes compared to the first half of twenty eighteen reduced revenue by 4,000,000 tonnes. In addition, there were a number of factors that impacted the cost of goods sold. There were reduced costs arising from the volume and mix changes, totaling 1,000,000, also affecting cost of goods sold we saw higher input costs and of 1,000,000. We also saw a million impact from exchange rate movements in the first half.
Together, this gave a net rise in gross profit of 1000000 to 1000000. Gross profit margin was 61.9%. If I now turn to the other factors that contributed to the movement in PBT reverting back to the chart on the left, operating costs rose by 1,000,000 which I will address on the next slide. Net interest and other finance charges were 1,000,000 better than in 2018. The net result was the profit before tax rose by 1,000,000 Let me now explain in more detail the main movements in operating costs from million in 2018.
Firstly, costs associated with the 14 UK depots that we opened in the first half of twenty nineteen and the incremental costs of the 33 depots that we opened in 2018 totaled 1,000,000 Cost increases for older depots were GBP 4,000,000, mainly reflecting higher payroll costs Other cost increases incurred to support growth total 1,000,000. This included the cost of digital upgrades. The closure of our Dutch and German depots cost 1,000,000 and there was a net reduction in overall rose by 1000000 to 1000000. Let's briefly turn to the remainder of the income statement as we've seen profit before tax was 1,000,000. This led to a tax charge of £16,400,000, the effective tax rate being 21%.
This gave a profit after tax of 1000000. This result gives earnings per share from continuing operations of 10.3p compared with 8.9p in 2018. Turning to dividend, the board has decided that we will pay an interim dividend of per share This is in line with our policy of paying an interim dividend that is 1 third of last year's full dividend, which was 11.6p. This will be paid in November at a cost of 1000000. This will give a total cash cost of ordinary dividend payments in 2019 of 1,000,000 Let me remind you that in 2018, we returned a total of million in share repurchases and dividends.
In March 2018, we announced a 1,000,000 2 year program of share repurchases, At the end of 2018, there was million of that program remaining. In February 2019, we announced that we would return an additional million via a further share repurchase over the next 2 years. So far in 2019, we have spent 1,000,000 repurchasing shares thereby completing the 2018 buyback and we have 1,000,000 of the 2019 program remaining. Let me now turn to cash flow from a position of having net cash of 1,000,000 at the end of 2018. We ended the first half with net cash of 1,000,000 Looking at the change since the end of last year, let me draw to your attention a number of items that explain the movement.
Net working capital increased by 1,000,000, which I will address on the next slide. Capital expenditure totaled 1,000,000 and included new depots, spend on the next phase of our Rawne's warehousing strategy, and investments in digital. Tax payments were 1,000,000, as I've already described, we spent 1,000,000 repurchasing shares in the first half, and there was a million contribution to the pension scheme. The net result of these and other movements the first half of twenty nineteen with net cash of 1,000,000 As I've already said, net working capital increased by 1000000. Within this, stock increased by 1,000,000.
This was impacted by Brexit planning new depot openings, and new kitchen ranges. Detters grew by 70,000,000, reflecting the typical pattern of trading that we see in the Let me quickly bring you up to date with At the end of 2018, the deficit stood at 1,000,000, a number of factors had caused this to change by the end of the first half. Firstly, from the P and L, there was the current service charge, administrative and interest costs of 1,000,000. Secondly, a decrease in the discount rate increased liabilities by 1,000,000 Thirdly, the group made a cash contribution of 1,000,000. Finally, with asset returns being £126,000,000 higher, the deficit at the end of the first half of the year was down by 1000000 to 1000000.
This of course is the balance sheet deficit calculated under IAS 19. Our deal with the trustees, however, is on the technical provisions basis This agreement reached in June 2018 is to pay million per annum for up to 5 years until June 2023. Also under the agreement, deficit contributions will be suspended if the scheme's funding position reaches 100 percent of the scheme's funding basis for 2 consecutive months and resumed if the funding position falls below 100%. Let me finish with some brief comments about trading in the first period of the second half of the year and costs for the rest of the year. Period 7 saw total UK sales rise by 7.5% for the 1st 4 weeks of the second half and was up by 4.8% on a same depot basis.
Our plans for the full year are unchanged. In forecasting this year's overall result the margin for the full year, a number of factors have to be considered. These include market uncertainties and the impact of foreign exchange rates. As we said in February, there will be an additional 1,000,000 of operating costs in 2019 compared to 2018 These are in respect of the closure of our Dutch and German businesses, digital upgrades and additional depreciation. These cost increases are in addition to the impact of the ongoing growth of the business inflation and new depots.
We now expect capital expenditure to be between 1,000,000 and 1,000,000 for 2019. This includes digital upgrades, new depots and the next phase of Rawls. On the subject of Brexit, we are mindful of the potential impact on our business. As a consequence, we are reviewing our stocking policy for at risk items currently resulting in an additional million of inventory held at the half year. We are also flexing our inbound supply routes and we now have in place appropriate logistics accreditations namely authorized economic operator stakes.
On that note, I'll hand you back to Andrew.
It's been a positive first half for Howdens. We've increased revenues and gross margin and improved profitability. With operating profit increasing at a higher rate than revenues. We continue to invest in people, infrastructure, depos and product. We're on track to open around 40 UK Depos, including the 5 that we've opened in Northern Ireland, all in our updated format and around 4 in France.
We are beginning to see the benefits from our ongoing digital upgrade program, and work continues on the next phase of Iran's distribution complex, which will replace our existing facilities in 2021. And we've reorganized our commercial team. I am pleased with the response of our people, customers and suppliers to the initiatives we've taken so far this year. The focus of the business is now We aim to maintain the margin discipline delivered in the first half, retaining a profitable balance between price and volume whilst working with our suppliers to keep costs down. We have a right sized lineup of new product offering for the second half.
Our lead bank and surveys are in line with where we'd want them to be. U. K. Depot sales for the 1st period of the second half have increased by 7.5%. We remain cautious on market conditions given the economic uncertainties, particularly the impact that Brexit may have.
The current date by which the UK must leave the European Union is 2 days prior to the end of our 4 peak weeks of period 11 trading. However, I'm confident in our business operating model through the changes in any changes in economic conditions, and we're on track to deliver our plans for the year. Before asking your question.
Thank you very much. Howard Seymour from Numis. If I could just ask 2, please, unrelated The first one is, looking at the workflow chart there, Mark, you could see that in the first half, the volume would have been down and the price up. And I just wonder how that tallies with the better pricevolume mix that you, that you later. Are we still in a situation where we're sort of washing through what happened over the past 2 years, and, and similarly, therefore, related to that, would you expect to see that wash through further in the second half?
I might as well ask the same question while I'm there. And Andrew, you alluded to the hardware lines, the 250 lines across the estate. Just give us a sort of the timing on that as to when that will be introduced, please?
I think we're at the point as we get to midyear 'nineteen where in terms of comps we're getting to a more even keel. So the fact that in the first half, if you look at the mix between price and volume, although we were up 5, that was plus 6 price minus 1 volume. But bear in mind, q11 'eighteen was plus-twenty 5 percent volume minus 7 price. That itself, I don't have everybody asleep, but that itself was a reflection of Q1 'seventeen where we entered the year with a 10% price rise and we have negative volumes and positive price. But as we get into the second half of twenty nineteen, we're much more on an even keel and the comps are on an even keel.
So we will see a much more even balance between price and volume in the second half. So we're expecting volumes to pick up, price still to make a contribution, but a much more even mix between the 2 in the second half of 'nineteen.
Regarding your second question, Howard, on the hardware lines, you'll recall that we did a hardware test introducing a broad set of hardware lines into new Depots and the revamped Depots. So, we've learned that there are fast sellers from that around 250 that are being rolled out to the estate right now in our autumn winter book that was presented at the start of the presentation. I'd make the point that we'll be launching 3 trade books per annum to getting the business into a nice trading rhythm through the years to product launches will be lined up to those cycles and the 250 are being rolled out. Right into depots now as we speak.
Ami Galla from Citi. Just two questions from me. The first one is on the, on the cash guidance. If you could give us some color as to how, what level of cash do you need to maintain for your normal working capital swings, And what is the, your perception of the surplus cash that is in the business today? Also in light of the highest CapEx guidance that you've given us, My second question is on the efficiency gains that you had booked in the first half.
Firstly, if you could give us some color to what were the key drivers of those cost reductions? And what should we expect for the full year?
Working capital swings, we have a formula that we use to calculate the second part of the first part of your question, which was about the cash surplus. So the formula includes the working capital swings we get to the end of the year, whatever our closing cash balance is, we deduct 1000000 for the working capital swing. So we have quite a vicious swing around peak trading October, what we call period 11, and working capital moves by about 100,000,000. We argue it's legitimate to stay out of bank debt during that swing because we currently have gearing not on the balance sheet, chiefly through the depot leases and the pension fund deficit. So we hold on to 100 We then deduct the final dividend in respect and whatever's left we deemed to be surplus.
So if you did that calculation 2018 year end cash, it would spit out round numbers, the number 50, which we declared surplus for share repurchase. Your question about cost savings in the first half, the efficiency gains within operating costs, they were a mix of savings that we made, in the marketing department would be a good example where we save money in terms of what we call our expo kitchen displays, that we show around the business We also save money on marketing in terms of printing and brochures. The other part of the saving was the costs avoided in the European businesses that we closed. So we closed Germany and Holland And clearly, following the date of closure, which was early in the, we're not bearing their costs for the remainder of the year.
Aynsley Lerman from Canaccord. Just two please. Obviously, big comp effect in your kind of numbers but just wondered what your views are on the underlying market you've seen in the first half and some of the macro dates and some of your peers have talked about June in the underlying trading kind of fell away a bit wondered if you saw any of those patterns? And then secondly, I think you say you're on track for your plans before you should we interpret that as being on track for to meet consensus, you're happy with where PBT consensus, I think you'll see in the first half some of those SG and A savings, that's a bit of a boost be in the consensus number?
I'll tackle the first question. I mean, we we've it is a tough market. There's no doubt we're working hard, to deliver. All regions across the business are making progress year on year, some more than others, but it's, we describe it as steady. We wouldn't could point to any particular period over the last 7.
We spoke to the volumes 1st few periods strengthening then in the last few periods. I think the amount of time that Andy and the team and I spent in front of depot managers across the country, we've got a very strong feedback of how they're feeling, how they're feeling towards the back half of the year. We've written on Tuesday night and they would, and this is a quote, they would say uncertainty in the market, but strong confidence in the hyden's brand, the product, the services. We're adaptable business. We are a combination of over 700 local depos that act in their local markets.
So, we feel okay as things currently stands, we look forward to the back half of the year with confident in the lead bank and confident that our customers are busy. They talked to us about being busy quite a number of months out.
Yes, on consensus, I think there are a lot of positives based on the first half. We're very pleased with the balance restored between price and volume. So good intelligence across the counter in the depots as Andrew's touched upon. But given the other factors around, given that 40% or more of our profit turns up in October. This side of October, you've got to be are pretty bold to be very confident about increasing expectations for the full year.
So we think all things considered, consensus is should stay where it is really settled.
Good morning, everyone. It's Robert Eason from Goodbody. Just maybe just following up on Howard's question in terms of his price volume mix. You've described it how it's going to change in the second half. Quite clearly, but how should we think of that in terms of a gross margin evolution?
Because obviously you have good progress in the first half the shifts back to volume in the 2nd half. And I know there's a year on year comps behind that, but should we think differently about the gross margin progression in the 2nd half? As a result of that. So maybe just talk through that. I know it's early, and I think this question will be kicked away pretty quickly, but I'll just ask it anyway.
Can you just give us, you know, maybe a bit more sense of, you know, the new format stores that have opened? I know there are only for 6 months. But are they maturing in those 6 months any differently from old depots, format stores? The 4 the three stores that you've re formatted from the old depots. Again, you know, we're there like for like significantly different from the average.
I know it's only 3 out of over 700 depots, but maybe just talk through those changes a bit more. And if there's any numbers you can give, it would be very helpful.
Yes, gross margin second half, I think we're still expecting to make progress number of reasons for that, but although, as we said earlier, the balance between price and volume is more even, we're still a price contribution. If you looked at period 7, I think that's confirmed our expectation. Secondly, typically, notwithstanding the sort of violence winds we had in price and volume since the start of 2017. In a typical year, the margin in the second half benefits from a richer kitchen mix in peak trading. So we get the benefit of that.
Thirdly, if you looked at our cost expectations, underlying costs within cost of goods sold, our saving programs, again, we think that'll be a reasonable contribution there.
Fair enough, fair enough asking the question on the neffo revamps. I mean, we watch it as closely, but I think as a board, we are really not trying to draw any conclusions too quickly. We like the feedback the customers are saying to us. We like that they're saying some of the stuff that we would wanted them to say around a better display at the front for customers. They can see the design area in the depot There's more convenient product to pick up.
Stuff seems to come out of the warehouse a bit faster. So all those sort of qualitative comments, we're very, very pleased about. One of the things we're trying to learn as we do the next lot, this eight lot that Andy's in the middle of rebuilding now is can we do them faster and more efficiently than we've done the first and we're starting to do some of that. So you've got quite a bit of time out of the build and some of the cost out as well. It is really dangerous in this business to draw conclusions too early one way or the other.
And it's you capture our completion until you go through period 11. So you can see how the lead banks build what the customers are saying. So that's why we've laid out the timetable to come back to us at the back end of the year and update you then.
It's Harry Gowers from JP Morgan. Wondering if you could try and quantify your outperformance versus the market or if you have a number for that. And the same depot growth in the first 4 weeks of H2 was wondering what that was comping against from those 4 weeks of H2 last year. And if you could just go into a little bit more detail on what your customers saying a few months out from October and their expectations given the uncertainty at the moment.
Just to define terms, so outperformance, do you mean us compared to the competition?
I mean, I think what we do is we spend our time worried about howden. And that is genuinely what we do in the business to ensure we're taking everything that we can. We do take a huge amount of feedback from the depot managers across the estate, whether we're getting any trouble from competitors in the local competitor set. And because we're devolved on price and responsibility down to the depots, our depot managers are operating within the local market. So we get comments from some of the other competitors, and we deal with them as appropriately in a local level.
I don't think we're seeing too much that would worry us within our, you know, trade or retail split in a minute.
Yes, if you look at Q3 as a whole last year, we were up 6% we were getting 1% from price and 5% from volume. So I think the best way to describe period 7 this year is to say it's a real number. So the 7.5% it's not the soft comp, it's not a strange comp. It's got a good volume contribution. So it's, yeah, it's it's genuine progress is how we see it.
The 3rd part of the question around, confidence and what our customers are saying just to expand on that a little bit more I think our builders are busy. That's what they tell us. Their order books are full. We get quotes from customers saying that they're busy right through to year end in some cases. We're confident what our lead bank surveys are saying.
But yeah, a wee bit of a cautious, cautious time, but I think tremendous faith in the Heiden's proposition and the Heiden's offer.
Morning. It's Sam Cullen from Berenberg. Just a couple of questions on the digital rollout evolution. Kind of a definitional question, really, on the, when you say even 30 times, so it's an increase in contact engagements. A, who's that with?
Is that going to build it? Is that consumers? Is that kind of new inquiries or is it? Just increased engagement with a particular project. For example, and if it's the former new inquiry, what's the conversion rate you'll see?
I know it's going to be the early, but it
would be interesting to get your thoughts.
So, yeah, one of the things we've outlined clearly in why Windu, I think most of the starting point for an end consumer when they're thinking about a kitchen is line now. They may well run around some of the retail operators or some of the trade operations gather a little brochures, either they obtain them directly from the stores or or from the builder. But, you know, search online is a, you know, a common starting point. So in some cases, they're end consumers. In some cases, their builder having, finding us and finding the product at the end.
Then they can fill out inquiries and go direct to the depots. In some cases, they are end consumers and the depot will take that lead and, that legally that we connected to a builder. We'd never trade with an end consumer when they're coming in there's some concern around that, we would never do that. But we have a high conversion rate when customers come in to depots. It's way too early to say what this is doing.
We've relaunched our what we call our mega nav in the business from 6 weeks ago and we're pleased with the results of what that is showing. So we're testing with natural search and we're testing with spend with Google to got some trials going into the business and we'll be updating more at the back end of the year or not.
Yes, just one question on the smaller format depots versus the larger format depots. What kind of level of sales per depot do you get from the smaller one? And like considering you've got the same amounts of range in both depots, did the economics not work better for a smaller depot and therefore, what's the kind of thinking between deciding?
Yes. I think again, the sample pot is small. And it's early as well. I suppose the way we think of it as a board is we want to get into catchments because we've got 2 size options. We've got another tool to deploy more readily.
So there's catchments in London that we want to be in. And because we can toast rack and squeeze ourselves into a smaller space, we'd rather be in that catchment, not be in that catchment. In the rural catchments, you might lower turnover per depot. Again, we want to be there and keep our footage lower. The cost difference between the two sizes is not that much.
Because the mezzanine that goes into the smaller one has got a higher cost. But I'm not actually sure I'll ever be able to answer your question in a way because it's we have smaller depots that perform out of this in because in the right sort of catchment, and then we've got bigger depots and rural areas that don't. So for us, it's about getting into the catchment and serving the customers.
Hi, sorry. Harry from Jake Moore again, a few follow-up questions. Was wondering, obviously, it's early days in, both Northern Ireland and the new France, 50 based strategy. I was wondering if there was anything that you see that's fundamentally different or niche about those markets. And I think previously, maybe at the start of the year, we're talking about early days again on sampling some kind of new bathroom trials or new bathroom ranges.
I was wondering if there was an update on that. And any feedback from customers on that? So, I
mean, there are quite different things, northern around, is, I always felt quite naturally extension for hydens to go over there, and these launched 5 Depots pretty close to the same day. We're very pleased with how they've landed, very pleased with how the proposition has landed in Northern Ireland and pleased with the early growth of those depots in Highlands is about getting the right team in place and getting the right manager. One of them is an existing manager and 4 have been picked up locally in the market. And I would say we're particularly impressed the standard of people that we've been able to bring in and how they're operating, how they've fitted into the company to extend the strong culture over there. The depots look fantastic.
We were out just a couple of weeks ago looking at them trading quite well. So that's good. They look and feel very similar to the UK, and I suspect they'll mature in a similar way to the UK, even though we're not that well over there because we don't benefit from any national types of advertising. France is different, very different, and we do believe that builders see the benefit of the Hyattens proposition, the unique product, the way of buying it, the opportunity to make money and particularly the in stock position in France. Just to go over to EBIT, what we have seen in France is a benefit from depot is being closer together.
So they build up the capability of customers around an area and teams around an area. So there's not a lot more to add in terms of our France development versus this time versus February, except New Depers open. It looks good. The new leader we put in place looks like you're settling in well. And we're finding sites and connecting the teams back to the UK better and removing some costs from the business that was there.
Bathrooms, we've always done bathrooms in, hide ins. We've always had a good range. It's largely been repurposed in cabinetry moved into the bathroom. We've done a sort of modular range that's been in trial and we've rolled it out to an increased number of depots in that catalog I was showing earlier. So it goes out to 350 depots right now, so it's progressing.