Thanks very much. Good morning, everyone. Thanks very much for joining us today for the Kingfisher's half year results. For those of you who don't know me, my name is Andy Cosslett. I'm the chairman of Kingfisher Group. I'm joined today by John Wartig, who joined the company as our interim CFO back in April. In addition to his CFO responsibilities, the board also asked John to take over the running of our transformation office, including a very specific and detailed focus on Castorama France as part of that. John's got deep operational experience of change management and his insights, some of which you will hear in some detail today, have been very valuable to both the board and to the Kingfisher team generally since he joined. We're also joined this morning by our incoming chief executive, Monsieur Thierry Garnier. You'll be hearing a few words from Thierry shortly.
Thierry, welcome. We will follow the usual format this morning. I'll start with an overall summary of our performance before handing over to John, who will run through the financials in more detail. Then, of course, we'll return with a look at the priorities and then take your questions. Let me start with slide four and the overall picture for the half year. Well, the transformation of the Kingfisher business continued during the half. Further progress was made in unifying our product. We launched a number of innovative new ranges, and we introduced further capabilities to our unified IT platform. The financial performance in the half, however, was mixed. Screwfix, Poland, and Romania all delivered like-for-like sales growth in the period. At B&Q, LFL sales were 3.2% lower, which included a 2% impact related to the discontinuation of our installation services last year.
Of course, the business continues to be exposed to the U.K.'s weak consumer backdrop. John will cover the performance drivers in more detail shortly. I should have said that we also have Graham Bell here, who's the CEO of B&Q. Any particularly nasty questions will be going straight to Graham. Welcome, Graham. The sales performance of Castorama France was impacted in roughly equal measure by the price repositioning that began in the latter half of last year, and by issues related to our change program that are impacting supply chain and logistics operations. The performance of Castorama France has been a major source of disappointment and concern to both our shareholders and our board, and rightly so. Now, later on, John will go through in detail the actions that we have underway to get on top of these issues.
At the Brico Dépôt format in France, gross margin rate and gross profit GBP were both higher year-on-year on lower sales. That reflects the proactive decision we took to reduce the level of low margin promotional activity there. On the digital front, the investments that we've been making are starting to gain some traction with good sales growth across the group from that channel. In the half, the group's overall gross margin rate grew by 60 basis points after clearance. The improvement largely coming as a result of our unified sourcing. Both the sales and gross margin rates of our unified products were up, increasing by 0.4% and 150 basis points, respectively. We would also note that gross profit GBP for the group as a whole were up year-on-year.
Our balance sheet remains strong. In his section, John will take you through the detail of how IFRS 16 has impacted us. Overall, a mixed picture for the half with some positive developments, also clearly some key areas that we need to address. Thierry joins us next Wednesday and will take over the reins from Véronique, who steps down next week too. Well, not too steps down next week. Given the closeness of this meeting to Vero's departure and the forward-looking nature of this presentation, in many respects, we felt it was more appropriate for me to take comments and make comments in this area rather than Vero, hence her absence today. Let that not detract from the tremendous contribution that Vero has made to this business over many years.
Over the last few months, Véronique has remained fully committed to Kingfisher and has worked really hard to ensure that the transition with Thierry was an orderly one. She leaves with our best wishes for the future. Now, turning briefly to slide five and the key highlights before I pass on. 59% of group sales in the half were unified. That's up from 42% in half one last year. While it inevitably takes time for new private label brands to establish themselves, sales of these ranges are growing, and the benefits of unified sourcing are delivering a higher gross margin. As we showcased at our Innovation Day in May, we've also started to increase the focus on the amount of product that is unique to Kingfisher with a number of key new ranges launched during the period.
As I said, digital performance in the half was encouraging, with digital now representing 7% of the overall sales volume for the group. Sorry, sales value. That's up from 6% last year, and looking back, 3% in 2016. Group digital sales were up 18% overall, with click and collect growing by 24%. Each of our operating companies delivered growth in this area, with all achieving higher website conversion and penetration rates. We are encouraged by the movement in our overall price tracker, which again improved during the period. The latest set of Net Promoter Score show an increase for each of our markets, which is also reassuring. Now, of course, the success of all the activity we're doing, in the end, will be measured by revenues and profits. These leading indicators are important signposts for us because they tell us that we're moving in the right direction.
Last, but by no means least, our colleague engagement scores remain very strong. These continue to sit above retail averages, which is very encouraging given all the change and disruption that's taking place across the business, and which, as you might imagine, can cause a negative impact on team and individual morale on occasions. Let me now introduce Thierry. Thierry is a highly experienced international retailer who has spent over 20 years leading large-scale operations and successful change management journeys for Carrefour in France, South America, and Asia. Most recently, he's been based in China, where the pace of change in retail is quite extraordinary, driven by the digital-savvy customer. I'm absolutely delighted that Thierry is joining the company, and I know he will make a big difference for us. Thierry, perhaps I could ask you to come and say a quick few words.
Thank you. Well, thank you, Andy. Good morning, everyone. It's really a great pleasure for me to be here and to meet you all. As you know, I will formally start in the business in a week from now, in a few days. I think it's a great opportunity for me to introduce myself, I don't want to let it pass. First, to tell you how excited I am to be joining Kingfisher and all the colleagues at Kingfisher in a few days' time. I am a retailer. I have a deep passion for retail. I like spending time in stores with customers, with colleagues. I like building teams and mobilizing organization around addressing the changing needs of the customers. That's very important for me. A big part of it as well is around digital.
As you know, I spent several years in China, so digital is very important for me. I would say it's a passion as well, and I think we have a lot of opportunities ahead of us. Maybe let me tell you a few things about my experience. As Andy just mentioned, I spent the most recent years in Asia. I was based in Shanghai, leading Carrefour Asia operation. As many of you know, if you follow retail, China is now a real retail laboratory for the world. We led Carrefour, we led in Asia and in China, a big transformation plan. First, this is about new format, new convenience store format, new big box format. We as well established a very large new supply chain in many different cities in China to improve fulfillment and availability.
This was around digital, so we built a very big food online operation in China. We did many partnerships with the Chinese digital ecosystem like Alibaba, Tencent, et cetera. You know those companies. At last, at the same time, we had to take tough decisions on costs, with store closures, downsizing of stores, reduction of costs overall. All these plans drove much better, I would say, much better results of the Asian zone for Carrefour in the past two to three years. Maybe last example I would like to give you is we launched in 2015 Carrefour food online operation, and by this summer, it represents the largest Carrefour food online operation by the number of orders per day or by the participation. Previously, I've worked extensively as well in France in many different formats, and I led the transformation.
You know, we had the Champion banner. I led the transformation from Champion to Carrefour Market a few years ago. That was successful transformation for over 1,000 supermarkets. Maybe last thing to say is, in China, as in France, I've been working in matrix organization, where getting the balance right between center and the operating companies, center and markets, is obviously a key success factor. I think clearly today I'm in a position to listen. I'm not in a position to take questions. It's too early for me. Just to let you know, in the past couple of weeks, I've had the opportunity to listen to many of the largest shareholder of Kingfisher, and I wish to continue to have this conversation. I'm sitting down in London. I will live in London. Now it will be much easier for me to meet with all of you.
I'm looking forward to meeting you properly face-to-face in the coming few months. Thank you all, and now I hand you over back to Andy. Thank you.
Thanks, Thierry. Merci. Well, as Thierry said, he's not starting for a few days, so probably a bit early for him to be answering questions today. I know he wants to engage over the next few months with as many of you as possible. Now, despite not being in the chair, Thierry has already been very engaged with me over the last few months on the important task of filling gaps and adding new talent to our leadership team. We've had a lot of change at the top of this organization over the past few years, and we now need to fill out the executive team, settle it down, and move forward together under Thierry's leadership. We do need to attract more talent to this business.
While of course, we will always have deep sector knowledge in the team, the balance of the team would benefit from more class-leading functional skills, some more experience of change management, and from best practice from the wider world of retail. We've been working hard on this throughout the summer, and we expect to have a steady flow of news on senior appointments over the next few months. Now with that, let me just hand over to John, who's going to come up now and take you through the financial performance in more detail. John?
Thanks, Andy. Good morning, everyone. In terms of structure, I'm going to start by giving you an overview of the group's performance in the half before taking you through the detail and the drivers. As Andy mentioned, part of my role involves steering the group's transformation office. I'm going to give you some insights and actions on this, in Castorama France specifically. I'll update you on the outlook for the full year. Before I start, just to remind you that from 1st of February this year, we have adopted IFRS 16, the new accounting standard for leases. All the numbers presented are therefore under the new standard, and the restated comparatives are in line with what we published to the market in our IFRS update last month. Turning to Slide seven and an overview of the income statement.
Total group sales were GBP 6 billion and down 0.9%, and LFL down 1.8%, both on a constant currency basis. Gross margin for the group was up 60 basis points at both reported and constant rates. This was a solid margin performance with the sourcing and price repositioning benefits partly offset by logistics and stock inefficiencies, largely in Castorama France, as well as incremental clearance. As a result of the margin improvement, gross profit was slightly ahead of half one last year. With operating costs up just over 2% on last year, retail profit was down 4.4% on a constant currency basis to GBP 466 million. Adjusted PBT, which is after central costs, interest, and transformation costs, was up 3.7% in the period to GBP 337 million, reflecting the expected reduction in transformation costs year-over-year.
I'm pleased to say in the next financial year, we'll simplify our reporting by removing the underlying profit measure given that the vast majority of the transformation P&L costs will have been incurred by the end of the current year. Our adjusted effective tax rate was down slightly at 26%. Adjusted basic earnings per share were up 7.3%, reflecting the lower tax rate and the impact of last year's buyback. Statutory EPS, which is after exceptional items, was down 15.6%. The board has maintained the interim dividend of GBP 0.0333. Now let me take you through the exceptional charges of GBP 93 million for the first half of the year. These largely relate to the ways we are dealing with the underperforming parts of our business.
The first component, a charge of GBP 68 million, relates to the redundancy provisions associated with the 11 planned store closures in France over the next 18 months and the previously announced store closures in Germany, which completed during the period. Sales of freehold stores subject to closure are expected to cover these cash costs of exit. The Russia and Iberia charge of GBP 26 million largely reflects store impairments in Russia. Given the challenging conditions in that market, we announced last year that we're focusing on markets where we are leading or can become the market leader, and therefore made the decision to exit Russia and Iberia. Both processes are ongoing. Moving on to Slide nine. Let me now cover the performance of our major geographies, which as you can see from this overview, is mixed with weaker sales performance in the U.K. and France, offset by higher gross margins.
There was a modest decline in profit in the U.K. of 1.7% and a 12.2% decline in France. Poland was broadly flat, and the losses from the other remaining geographies were flat year on year. On to page 10 and performance in the U.K. and Ireland. Against the backdrop of a weaker consumer and a softer housing market, B&Q delivered a negative 3.3% LFL for the half, which as Andy mentioned earlier, includes negative 2% from the discontinuation of installation services at the end of Q3 last year. There were several other factors that impacted the top line as follows. The ongoing implementation of new ranges, including surface and decor and kitchens, caused disruption. Weather-related categories were down nearly 3% against a strong comparative driven by very hot weather in Q2 last year.
As a reminder, our Q2 finished at the end of July. Digital sales, however, continue to grow up 10%, now representing 5% of total B&Q sales. We also saw a modest benefit from home-based store closures. Screwfix continues to gain market share through its convenience model and strength in digital. Like-for-like sales grew by more than 5%, while digital sales grew by 18%, now representing 32% of Screwfix sales. We also opened another 16 stores in half one, taking the total number of stores to 643. We look forward to the business opening its first store in the Republic of Ireland later this year, our store opening targets for the full year remains unchanged. Gross margin for the U.K. and Ireland increased by 60 basis points, benefiting from unified sourcing and B&Q discontinuation of installation services.
The margin in the second half of the year will be impacted by incremental clearance from B&Q's old kitchen range and ongoing investments in price in Screwfix. Overall, constant currency retail profit in the U.K. was lower by 1.7%. Continuing on to slide 11. LFL sales in France were down 4.4%. This compares unfavorably with Banque de France data for the French DIY market for the same period, which was up nearly 2%. Looking at each business in turn, Brico Dépôt's 4.6% like-for-like decline was driven by the proactive reduction in lower margin promotional activity, which had a negative 5% impact on Brico's like-for-like. As a result of these actions, gross profit GBP increased year on year. At Castorama, we saw a decline of 4.3%, largely reflecting price repositioning and transformation-related activity, which I'll talk more about on the next slide.
Total France gross margin increased 60 basis points, with an increase at Brico Dépôt, partly offset by logistics and stock inefficiencies at Castorama. Overall, the increase in France gross margin rate was not enough to offset the like-for-like decline, and retail profit in France ended up lower by 12.2% at constant rates. Turning to slide 12 and an update on Castorama. First, I'll recap on where we are today, give some insight on some of the operational issues we are working through, and then highlight the area of focus. During the period, we launched a number of new major ranges, including outdoor, surface and decor, bathroom storage, and tools and hardware. Around 60% of the offer is now new unified product. Surface and decor is an important category for Castorama, and there was disruption as the new ranges landed, adversely impacting like-for-like sales.
On a more positive note, the leading customer indicators are moving in the right direction. For example, price perception is on an improving trend, and customer Net Promoter Scores have improved by five points over the year. The price index has also come down and now only slightly above our closest competitor. Digital sales, click and collect, and website conversion rates are also up on Castorama, albeit off a small base. The key to the business will be improve the effectiveness of its enabling technologies and operational processes, and that's what we're working hard on. To contextualize, the operating model across Kingfisher today is underpinned by a unified IT platform, along with a split of responsibilities across local markets, and our group offer and sourcing organization. Applying this model to Castorama France, which comes from a legacy of a decentralized model, has been highly challenging.
The implementation of the change program at Castorama France has therefore caused issues and continues to cause issues in our stock planning, stock management, and logistics processes, which in turn is leading to lower than expected stock availability and fulfillment rates. These issues have arisen due to ongoing challenges with vendor management, product data, and changes to store operations, which are all being aligned to the new IT platform, operational processes, and unified ranges within the business. Let me illustrate this with a simple example. Castorama is currently working with over 1,000 vendors who are each required to comply with defined processes around ordering, receiving, and invoicing. If a vendor fails to comply with the ordering process, this can mean stock is received but booked into the stock system manually, requiring significant time and effort through workarounds to be completed.
This in turn can lead to temporary inaccurate stock records, additional costs, and delays. To amplify this, we're incurring additional costs due to running legacy systems in parallel during the transitional phase. These operating issues are typically manifesting themselves in the supply chain, which ultimately has an impact on our stores, online, and of course, our gross margin. Therefore, correcting the underlying operational issues is a key area of focus for us. Alongside the implementation of new differentiated ranges, we will continue our work to improve the effectiveness of Castorama's IT platform, along with the efficiency of its operational processes and fulfillment function.
Part of getting this right is to review and adjust, where necessary, the balance of responsibilities between Group and Castorama. We believe we have identified the pain points and have a series of ongoing detailed work streams to both eliminate the underlying issues and take corrective action to drive through the benefits of the change program. Over time, this should improve the overall performance of our supply chain and logistics operations, which is essential for Castorama to be in a position to grow again. We'll also launch the next stage of our e-commerce platform in the second half to support continued digital growth. Turning to cost and store performance. Cost benefits are being delivered from the 5% FTE reduction that took place in the second half of last year, following the transition to our financial shared services center in Poland.
Following consultation processes, we'll be closing nine underperforming Castorama stores over the next 18 months. In summary, the performance of Castorama continues to disappoint. However, the business has taken important steps to improve its customer proposition, its offer, its price competitiveness, and its e-commerce capabilities. The primary causes of the operational issues have been identified, and we're taking the necessary actions to address them. This will take time, but we have a focused work plan in place to deliver tangible and sustainable improvements in these areas. Turning to Poland and Romania. Poland delivered good LFL sales growth of 3.3%, benefiting from weather-related categories, particularly in Q1. We estimate that Sunday trading restrictions, which removed one further day of trading per month, impacted like-for-like sales growth by one percentage point in half one.
Poland's gross margin was down 20 basis points, largely due to higher clearance and higher outdoor sales, which are lower margin. Cost increases related to wage inflation, higher digital costs, and pre-opening costs as we open two new stores during the half, also impacted margin. As a result, retail profit was broadly flat. In Romania, like-for-like sales increased by 10.5%. Contributing to this was the good performance from the unified ranges. Praktiker stores have now been rebranded as Brico Dépôt, with the final store to complete in the second half of this year. In addition, the quality of ranges has both improved and is expanding in terms of SKUs. This is, however, a period of transition for Romania, and the overall business made a retail loss of GBP 8 million, driven by losses in the former Praktiker stores.
Towards the end of H2, we will start the back-office integration process for the businesses. It should be noted, we are currently running both businesses separately. Let's now turn to slide 14 and the remaining geographies. Combined like-for-like sales in Iberia, Russia, and Screwfix, Germany declined by 4.9%, with a reported retail loss of GBP 5 million, including equity accounting profits from our JV in Turkey. Our exit processes for Russia and Iberia are progressing. We are currently reviewing a number of options for both businesses, and we'll update you as soon as we can. Spain continues to generate a small profit whilst the trading environment in Russia remains challenging, resulting in the impairment that I mentioned earlier. In Germany, for Screwfix, we have now closed all 19 stores, and there will be no further Germany-related losses in the second half. Moving on to slide 15.
We can see that unified and unique ranges continue to outperform our non-unified ranges in both sales and gross margin. 59% of sales were from unified and unique ranges. Which grew by 0.4%, against a 0.9% decline in the non-unified ranges. We achieved growth in 4 of our 7 categories. Of the 2 negative categories, one experienced significant range changes during the period, and the other faced tough weather-related comparatives. Before logistics and stock inefficiencies, all categories delivered growth, profit growth, demonstrating the ongoing benefits of unified sourcing. On slide 16, we set out the bridge of the group gross margin movement of 60 basis points for half 1. We can see that 150 basis point gross margin improvement in unified product has driven an 80 basis point benefit across the group. Whilst the margin on non-unified offer was flat year-on-year.
Other positive margin drivers for the group included price repositioning, mainly driven by Brico Dépôt, which led to a 30 basis point improvement, and the discontinuation of installations at B&Q, which had a 20 basis point positive impact. Partly offsetting factors included incremental clearance ahead of the new ranges launch in half one, which had a 40 basis points impact during the period. As highlighted earlier, logistics and stock inefficiencies, mainly in Castorama France, had a 30 basis point impact on margin. Slide 17. This provides an overview of our cash flows and a summary of our net debt position under IFRS 16. Firstly, on cash flows, we generated GBP 695 million of EBITDA in half one and paid GBP 236 million of net rent.
Moving through the bridge, there was a GBP 45 million outflow of working capital. This reflected an increase of stock of GBP 111 million, which was driven by store expansion, changes in operating model, and higher stock levels, primarily in France. This was partly offset by a net increase in creditors of GBP 66 million. Bearing in mind, we're looking here at the movement in working capital over the six-month period, seasonality plays a part. However, as mentioned earlier, improving stock management and planning processes is a key area of focus for Castorama France. After capital expenditure of GBP 163 million and tax and interest payments, free cash flow in the period was GBP 204 million. Income from property disposals is largely driven by a small number of sale and leaseback transactions in B&Q.
After dividends, the movement in cash was positive GBP 131 million, helping to improve our cash balance to GBP 385 million at the end of the half. Under IFRS 16, which I'll cover in a moment, you'll be aware our lease liabilities of GBP 2.6 billion are now included on our balance sheet. Our lease liabilities were largely unchanged since year-end. The improved cash position helped reduce our net debt by GBP 158 million during the period. As a result, our restated net debt to EBITDA ratio fell from two times to 1.8 times, which remains consistent with our objective in maintaining our solid investment-grade credit rating. Turning now to slide 18 and our full year 2019/2020 outlook and technical guidance. Full technical guidance is outlined on this slide. I'll just pick out a few items. As we enter the second half, the outlook for our main markets remains mixed.
The U.K. market in particular remains uncertain in the short term in B&Q. The discontinuation of installations will annualize at the end of Q3. In France, we expect Castorama to underperform. The reduction in promotional activity annualizes in Brico Depôt at the end of Q3. Excluding Russia and Iberia, we continue to expect gross margin after clearance to be flat year-over-year. Some of the positive margin drivers in half one, such as price repositioning at Brico Depôt and discontinuation of installations at B&Q, will not fully repeat in half two. In addition, we have also slightly upped our incremental clearance guidance for the full year to GBP 30 million-GBP 35 million from GBP 25 million-GBP 30 million, which includes clearance for B&Q kitchens in half two. Screwfix will also ramp up its investments in price in the second half.
We now expect central cost to increase to around GBP 55 million, which are GBP 5 million higher than previously guided, largely reflecting additional activity at the center as we strengthen our resources and leadership team. For this year, transformation P&L costs are now expected to be around GBP 50 million-GBP 60 million. Our guidance on CapEx remains unchanged. We expect total CapEx to be up to GBP 375 million, which includes investments to support the unified range implementations, new store openings in Poland, as well as investment in fulfillment capabilities. Finally, in respect of store closures, we continue to expect any future cash cost of exit to be covered by sale proceeds from the owned stores. Slide 19. On this slide, we summarize the impact of implementing IFRS 16, the new accounting standard for leases. We adopted the full retrospective transition approach from the 1st of February 2019.
The first thing to say is that the new standard has no impact on cash flows or the underlying economics of the business. The table on this slide shows the respective impact on retail profit and the balance sheet for last year's full and half year. In FY 2018/2019, retail profit increased by GBP 171 million as the pre-IFRS 16 rental charge is replaced by a lower depreciation charge. By geography, the main impact is in the U.K. due to the high proportion of leased stores. However, after IFRS 16 impacts on interest costs of GBP 169 million, the net benefit to underlying profit before tax is negligible. In terms of the balance sheet, net assets at 31st of January 2019 have reduced as expected.
This reflects the new right-of-use asset of GBP 2 billion and the new lease liability of GBP 2.6 billion, which is lower compared to the liability which arises under IAS 17 from our previous assumption of eight times property operating lease rentals. The net debt to EBITDA multiple at the end of last year is restated to two times under IFRS 16 versus 2.6 times under IAS 17. Moving to slide 20, where we've set out the steps taken to manage Brexit and foreign exchange risks. We do not anticipate any significant change to stock levels in the 31st of October no-deal Brexit scenario and have sufficient stock in place to cover near-term demand. We'll continue to monitor this position and take action if needed.
With regards to tariffs and customs, if the government's current proposal for no-deal tariffs are confirmed, it would have neutral impact as most of our products would carry a 0% tariff. We've also updated our importation process to prepare for a hard border between the U.K. and the E.U., including access to simplified customs procedures and alternative cross-channel and deep-sea ports of entry. We also remain engaged with our key vendors in this area. On talent, as you would expect, we are keeping a close eye on retention and hiring, but haven't seen a noticeable impact to date. We've also been helping some existing employees to gain settled status. Looking at foreign exchange exposure. Of our total annual COGS balance of £7 billion, around 20% is purchased in US dollars, of which half relates to the U.K.
We have in place an 18-month rolling hedging program to hedge all committed orders against changes in FX rates for the US dollar and the euro, along with a significant percentage of our forecast net exposure above and beyond what is committed. There is also some protection from cost price inflation from our existing stock levels and some of our existing supplier agreements. Finally, to summarize, the first half sales performance was mixed, but frankly, disappointing. The positive performance of Screwfix and in Poland were offset by France and B&Q. For Castorama France, the primary causes of the operational issues have been identified, and we have a focused work plan in place to deliver tangible and sustainable benefits over time. Encouragingly, group margin was ahead by 60 basis points, benefiting from unified sourcing and price repositioning. The business remains cash generative, and we retain a strong balance sheet.
These results were delivered against a challenging backdrop, and the outlook for our main markets remains mixed. This is particularly the case in the U.K., where Brexit uncertainty remains high. Finally, we have reiterated our guidance of a flat gross margin % after clearance for the full year. With that, I'll now hand back to Andy. Thank you.
Thank you. Thanks, John. Just moving on to the final section. I think it's generally acknowledged by most people that what it takes to win in mainstream retailing these days is quite different to where it was a few years ago, perhaps. While the core disciplines of retailing remain as necessary as ever, they are no longer sufficient. Mainstream retailers today certainly need to be recognizably competitive on price, offer great value. They need to deliver ultimate convenience through a seamless integration of their physical stores and digital platforms. They need to present a range of products and services which differentiate them from their competition. Kingfisher in its old form ticked few of these boxes.
Both to survive and prosper into the future, the group really had to make some fundamental changes as to how it went to market and to its internal ways of working. It needed to become much more efficient to generate the sorts of funds it needed to reinvest in the customer proposition, in better prices, in digital capability, and in the quality of its products. Kingfisher's strategic approach is pretty simple. You can see it in this slide at the top of the house on this slide. Using our scale more intelligently for the benefit of our customers seems a fairly obvious thing to want to do. Scale is one of Kingfisher's greatest assets, and it does seem odd not to want to deploy that as a competitive advantage. To make it pay, our scale pay, we need to get two discrete blocks of activity right.
First, we need to have the right customer proposition, the right balance of local, international, and private label brands, competitive prices, leading-edge digital experience, active management and development of our stores, brilliant customer service, and for Screwfix in particular, a well-resourced expansion plan to maximize its tremendous growth potential. At the heart of all this sit our teams. It's absolutely vital that they are working in sync with real clarity of understanding about what's best done in the center and what's best done staying local. This is a critical part of making our revised operating model work, and it's an area that we're keeping under close review. Certainly an area Thierry is going to be spending a lot of time. Underpinning that superstructure, we have what we call our enablers.
These are the services and infrastructure platforms that connect our business, and that once fully installed, will allow it to function much more efficiently. These enablers include our sourcing capability, IT, supply chain, and shared services. Most of these enablers have either been completely rebuilt or built from scratch over the last three and a half years. We've centralized what was a completely disparate sourcing model in which each operating company was fully responsible for its own ranging. We've implemented a common IT platform capable of delivering significant operational efficiencies and clear customer benefits. We've launched a scalable e-commerce capability across the business, and we've leveraged our scale to establish group-wide GNFR and shared service capabilities. These are fundamental changes to our DNA and to our ways of working that will allow our scale advantage to be fully realized.
Much of this work has worked, and it's worked well. As I mentioned earlier, sales and margin from our unified offer continues to grow. We're seeing quality output now really coming through in the area of product design. Digital sales, as you've seen, are on the rise. It's equally clear that some of our enabling technology and operational processes are not working as well as they need to. As you've heard, the performance of Castorama France being the key area where the enablers are not yet working well enough, and it's been highly disappointing. We know the benefits of what we've built are there, we do not yet see them flowing through to the customer or into our financial results. The fact is, I believe, that we underestimated the operational and financial disruption that IT, supply chain, and product range transformation at this scale would cause.
As a result, we're incurring too much duplication in remediation costs, and our trading performance is being hampered. While these enablers are largely now in place, we need to make them work more effectively, and we are 100% clear that execution in this regard is our first priority. Slide 24. This has been a busy year, as we said it would be, for new range launches. The first half of the year was particularly busy. Many of these new products, as we've said, are unique to Kingfisher, which is a trend which we shared with you at our innovation day in May. Extensions to our highly successful bathrooms range landed in half one, as did new outdoor ranges and a revamped tools and hardware offer. Unified ranges for surface and decor, which is the group's largest category by sales, are now being rolled out.
The much-anticipated new kitchens ranges will arrive in B&Q during the second half of this year, with introductions into France planned for next year. We are nearly through the heavy lifting, and the changes are key to turning up the dial with our customers over time. To slide 25 and our priorities for this year. It's essential then, and I hope we've made this clear, that we are going to tune up the key enablers of our transformation program: IT, digital, supply chain. These underpin the long-term growth of our business. It's also essential and a real priority that we get on top of the underperforming elements of our business, particularly at Castorama France. The two issues clearly are linked.
In addition, we need to see through other pieces of work which remain outstanding. Following relevant consultations, we're committed to closing 15 stores across the business, including 11 in France, over the next 18 months, and most of these will take place in the full year up to the end of our year 2021. We are reviewing, as you've heard, a number of options with regards to our planned exits from Russia and Iberia. Just a word on Screwfix. As planned, we're looking to expand this business faster by taking action in our core U.K. market, including continued investments in price. At the same time, we're going to be pushing ahead faster with our international rollout plans. We're on track with our U.K. store openings program.
We're on track for our first store opening in the Republic of Ireland, and we're continuing to validate urgently the potential of this brand in the French and Polish markets. The success of all the above will ultimately be measured by a return to group sales growth, which we are confident about in the medium to long term. We believe our margins and our cash generation can grow as the inefficiencies related to stock management and logistics clearance and dual running costs are driven out of the system, and the benefits of scale are finally allowed to flow down to the bottom line. To summarize then and close on Slide 26. Kingfisher remains financially strong and is well-placed with leading positions, first or second, in the markets in which it operates, all of which have long-term growth potential.
The transformation that started nearly four years ago now has continued across the group in the first half of this year. Most of the building blocks to support future growth are now in place, and the focus very much now is on proving the effectiveness of our enabling technology and processes. In terms of guidance, the outlook for our main markets remains mixed, with the U.K. in particular facing continued uncertainty that is affecting the consumer and the housing market. Kingfisher continues to expect a flat gross margin % for the full year after clearance. To close, we're very much looking forward to Thierry joining us as new CEO next week, and to him bringing a completely fresh perspective to everything we do. His experience will be invaluable in taking advantages of the considerable opportunities we know this business still has in front of it.
He has engaged in the plan to bring new talent into our executive team urgently, and I'm very confident he's going to hit the ground running. Thank you very much for listening and your attentiveness. John and I will be very happy now to take any questions you might have. Please, I do apologize for not knowing all your names at this point, but if you could raise your hand, I'll take you in order. Please, if you could say your name, that would be great as well. I think the gentleman in the blue shirt was first, and then we're going to the gentleman in front.
Thank you. Good morning. It's James Grzinic from Jefferies. I appreciate the added transparency on Castorama France. In the spirit of that, I'm wondering whether if you can give us more details in terms of when were you able to exactly articulate what was going on? At what point did you start putting remedial action to work?
I think we started to become aware that the early signs started about this time last year in terms of starting to believe that there were tensions in the team, which is usually the leading indicator that there are deep problems. I think the actual supply chain issues didn't really manifest themselves until the spring. Since the spring and John's arrival, we've been able to increase the line of sight that we've had on those issues rapidly. In that discovery process, we found a lot more going on.
We've been making our fixes since then, and John's been highly engaged in that. We're working with, obviously, our teams in France. Because it's a combination of IT and supply chain working together, it's complex but highly important set of teams we've got in place now and test work streams. That's really been the issue. I think that was the first signs back end of last year, but really in terms of the manifestation, probably in the spring.
Thank you.
Thank you. Sorry, I think sure.
Thank you. It is Andy Hughes from UBS. Got a few related questions here. Just kicking off with the GBP 68 million exceptional charge. It seems a pretty hefty sum. There is what? 11 big stores and I guess 19 tiddlers in Screwfix. It seems quite a big charge. Is there any stock clearance within that? Is the stock within the stores being cleared?
Consultation related to the actual program itself, primarily focused in France. France is the balance of the range of the benefits of the Screwfix stores.
Right. Okay. Nothing on stock.
Nothing on stock.
Yeah. Just moving on to stock, obviously, you're sitting there with GBP 2.8 billion of stock. Your stock's been going up whilst your sales have been going down. Can you give us any sort of feel for what the right level is? I mean, I presume you're carrying indicative new products or not new products, often some old product stock. Can you give us a split? I mean, if 59% of sales are in new categories, is that mirrored in your stock or is there more or less in terms of-
Well, as you believe it's a combination of that. What we have got is part of the buildup has been as we're bringing in the new ranges, we need to actually have a peak in actually building your inventory for the sell-through. That should graduate over time. Also we've got a growing amount, particularly in France, of actually stock that's actually now ready for clearance. That's got to work through as well. I think there's been a buildup in both new ranges coming through, and then we've also had the deleted items, if you like, that we've got to work through as well. In terms of a number where that should get to, I'd hesitate to give a number at the moment, but I think we do need to actually reduce this in both areas.
One will happen naturally as the new ranges come in, but the other actually, the non-unified ranges are those that have been deleted. They'll have to reduce over the next six to 12 months.
The old line stock, which is going to be discontinued, what sort of rough % of inventory is that?
Give you a number, it'd be sort of 5%.
Right. Okay. That's quite low. I mean, what I'm trying to get at is when's the magic year going to be when you get your supply chain gains coming through and you don't have the clearance to offset it?
Yeah. I see where you're coming from. Yeah. In terms of What's our baseline clearance when everything goes through? I think we're going to need another year and a half at a minimum, which definitely won't happen this year. We still have new ranges coming in, particularly in kitchens in France next year. There will be some range extensions of the existing ranges we'll put through. I think it's probably another year and a half before we get down to a normalized level. We don't have a total fix on that at the moment.
Great. Thank you.
There was a lady down here.
Thanks. Anne Critchlow from SG. Two questions from me, please. When do you think you'll be able to drop the legacy supply chain systems in France? Secondly, what percentage of product is now relating to the product unique to Kingfisher?
It's a good question on the legacy. I'm on it. Most definitely, I think that has been an issue as we've been transitioning. We're now actually launching or completing the IT platform rollout in Brico Dépôt during the course of this year. Working it through with the team, we're really looking through in the course of next year. Second half of next year, what we'll see is dropping the core legacy systems, and that'll actually release the duplication and some of the costs we've got in the IT area. Part of that's obviously going to be dependent on how quickly we can move through these ways of working and the process engineering that's required. As Andy said as well, and I said that both of these models have been decentralized models. We actually have to centralize and actually get the processes and ways of working.
I'm aiming for the second half of next year.
On the unique number, I believe, I'll be corrected if it's wrong, six?
Six.
Okay. 6%, 7%. It's still relatively low. As you saw, if you were there in May, it's an area where we think there is a lot of mileage, and the opportunity to be more innovative. We have invested quite heavily in the last few years in product design capability that we never had before. We do actually have now teams of people coming up with our own customer-focused innovative products, which we're now getting our new supply base needs to make for us. Again, it's a journey, but we are confident that's going to rise. Again, one of the questions for Thierry is exactly how far does that go? What's the return on investment of that? How does that stack up against international brands and local brands? Which is all part of that customer proposition piece that we were talking about.
Thank you.
Lady here, and then let's down the front.
Morning, Kate Calvert from Investec. Can you explain why Brico Dépôt didn't have the same supply chain issues as Casto? What's been different in the implantation?
Two things. First of all, Brico Dépôt isn't fully on the template yet. It hasn't been fully transitioned. That'll happen in the second half of this year. Secondly, and I think a major component there is actually has significantly less SKUs. If you take Castorama, it has close to 60,000 SKUs, but currently Brico Dépôt only has 13,000.
Also, it's had less unification, so the complexity there has been less. Also, I'd like to think that we've learned some of the lessons from what's actually transpired just recently with Castorama. It's a lot of the same people that are working on that. I think the last point to add, not a small point, the master data, which is critical to this, was actually in much better shape in Brico Dépôt because of its legacy of how it ran its business.
I think that's really important. Sorry, if I may just to add to it. It is a really important point. All our different opcos started in a different place. We were never in a rollout situation as some companies have. We were in a situation where we had legacy businesses that all were running differently, and we've had to migrate them all to this new future. What that's meant is the ones that have had the longest journey to travel up the centralized curve, which is Castorama, have found it the most challenging. Brico Dépôt has always had a fair amount of centralized within their culture and their management structures and frameworks. It's always been much more of a central model. I think that really helps psychologically, and in the stores, people are prepared to follow and understand central instructions much more rapidly.
It's the combination of all those things, I think, together which answers the question. Sorry, did you have a follow-up?
No, I don't. No.
Okay. Thank you very much. No problem. We'll go on the front here actually first, if we may. JV? Sorry, mate, we keep moving you. There you go. Where are we now?
Thanks.
Sorry. I'm blinded by the light. Sorry.
Simon Irwin from Credit Suisse. A few random questions. Can you talk a bit about footfall at Castorama? I'm intrigued by your comments around NPS going up. What's happening? Are people just not coming to the store and finding poor availability? In which case, it's quite surprising that the Net Promoter Score is improving.
Can you just talk a bit more about that dynamic? Second is, how has GoodHome gone down as a brand within the business? It's clearly a very important initiative for the group. Can you just talk a bit about clearance and guidance? My impression was that clearance this year was going to be a bit more first half weighted, and now you're talking about it being second half weighted.
Thanks, Simon. I'll take the first two, if I may, and then John maybe talk a bit more about clearance. Footfall is down, obviously. I don't know by how much, but it's probably by a quarter in the last thereabouts. Majid is saying thereabouts. We've definitely lost footfall over the last two, three years. Part of that's been the reaction to the EDLP strategy which we've implemented. We've brought the overall price index of Castorama down substantially by about five, six points over the last couple of years or two and a half years. In doing that, we've also taken away the price point spikes that you get in promotional activity, and we know that a fair portion of people who came into the store were coming in on promotion deals only, which is the same for Brico Dépôt.
The strategy was around trying to make sure that we had a more widely understood universal message of everyday low price, which people would respond to. I don't think they're in conflict. I think the fact that we've got lower footfall is a reality which we are trying to address through all the things we've talked about. The fact that the NPS scores, because you do NPS scores with the people who shop with you. I think we're actually providing a better service and product and experience for the people who actually use the store in the way we would like them to use it, which is as a place to come as their first choice home improvement center. The promotional people have gone for now, and it's our job to convert them into loyal customers, not just deal seekers. I think that's what's happened.
GoodHome?
GoodHome is very new. We've spent a lot of time building that brand and just putting it together. It's our first multi-regional, multi-category entry, and I think it is important, as you say, not just because it is our first one that's like that and is therefore a really interesting brand departure for us. Also because it ticks some boxes which some of our other brands aren't quite as forceful on, such as the sustainability platform and the profile of the brand, things that which we know are going to be really important for customers going forward. It's landing well, but it's just rolling out. It's just beginning. We've got flooring in stores. Maybe Graham, you'd like to make a comment? Very early days. Customers have to get used to new brands. Do you have a comment about ups and downs of the introductions, Graham?
I think as ever with a new brand, there is a timing issue, I think if I could say, the earliest ones we've had then has been the GoodHome paint. Of course, paint is one of those brands where some customers have a lot of loyalty and getting the changeover. What we have found, especially from our staff and customers that are using the new GoodHome paint, they're delighted with the quality and the price of the product. That's landed really well. With GoodHome flooring, which has kind of been the next one to lead, and we're getting a lot of great feedback and starting to see the sales lift with that. I think the next big one for us probably is going to be GoodHome kitchens, which we're obviously just kicking off at the moment.
I think it is a timing issue, but some great feedback from the customers and the staff, which I always think is a great measurement. Listening to our customers, it's about the quality of the brand as well as some of that sustainable issues that really are coming to the fore. Predominantly, we've been asked a lot from customers about not just the sustainability of that paint, but also is it suitable for children, which is questions that our older generation never used to ask.
Clearance, Graham?
Yeah, on clearance. Yes, Simon, we've always said that we thought that clearance should be half one weighted, primarily associated with implantation, surface, and decor. We have increased, as I said earlier, from 25 to 30 to 35. We also expect incremental clearance now in half two associated with the new B&Q kitchen range. Just to note, the half one clearance was about 40 basis points on sales of GBP 6 billion. That calculates to around GBP 20 million. We're just building in the incremental from B&Q.
Thank you. Sorry, finally in the back. Sorry.
It's Geoff Lowery here from Morgan Stanley.
That's all right.
Can I just take you back to slide 16 of the presentation, which is the gross margin bridge, where you have a 30 basis point improvement from price repositioning, mainly at Brico Depôt France. Could you just explain to us exactly what you've done in terms of price repositioning at Brico Depôt France?
I'll take it. I'll try. You'll no doubt correct me if I get it wrong. One of the main features of Brico Dépôt France is that we used to run about 16%-17% of our sales were on arrivages, which is imported product, which is sold at a deal as one-off lots. That has gone down significantly. We're probably at the four or five.
Four or five.
level now again because you know. That whole strategy, how much, where is it? We're just testing the market to see where the right point is. It's that. It's the reduction, because that was typically, if we made anything from it wasn't much. It was about taking that away from our sales line and converting that into more profitable sales, even though we got an impact on the top line.
Great. Thank you. If I could just have one more.
Yeah.
We don't know where we're going with Brexit at the moment. If we do end up with the U.K. having a different trade policy to the rest of the EU, are you still going to be able to get the group scale buying benefits, do you think, going forward? Obviously, if the U.K. has different tariff imports relative to the EU tariff imports from, I don't know, China or wherever else you may be sourcing product from, could that sort of obviate the whole strategy of buying jointly?
We don't think so because we'd still be better off than we otherwise would be. Unless we were buying most of our things locally, which I don't think we ever really do.
We probably a third, a third, a third in terms of sourcing, because part of the strategy has been to, on the unified product particularly, is to source from the Far East. We actually have hedging there and also then they're sourcing locally. To your point, in terms of the tariffs, particularly from Europe, if the government guidelines that they've put out, which they're still to reaffirm, come through, because we're not actually selling food or pharmaceuticals, et cetera. The products on that list are the ones that we sell actually have zero tariffs. That falls into place.
Depending on how we like it.
How it lands.
Yeah. I don't think so, no. Sorry, gentleman in front of the fellow gentleman who just spoke. Thank you.
Yeah, hi. Geoff Lowery at Redburn. Can we talk a bit about Screwfix? I think price and Screwfix were sort of co-joined four or five times through the presentation. Should we take out of this that you've been a bit greedy on price in recent years? How far do you need to go? Can you help sort of quantify in that group gross margin bridge what the Screwfix price component is in half one, half two?
Do you want to say that, Graham?
Yeah, sure. I think we are sensitive to the competition. We have actually been addressing, we have put some price realignment in the first half. We do have some upweighted in the second half. I wouldn't use the term greedy. I think it's just recognizing the competitive situation. Our price index now is actually, in some categories, quite close. It's sort of 101, 102%. We're continuing to assess that.
Can we talk about transformation costs? You're obviously taking away one of your three PBT definitions, which is totally fine and logical.
Yeah.
Should we be adding back GBP 50 million-GBP 60 million next year to the adjusted number for the non-recurrence of transformation costs? Given all that you've got to do, is this just going to be a permanent feature now?
I think part of the logic there is that the transformation costs within P&L transformation, we were trying to extract those costs that were actually a part of the initial establishment of, for example, unified offering. As that's now come into play and it continues to work, that is actually generating profitability for the business. It would be incorrect for us to actually extract that and show as a separate P&L item. Any associated cost with any ongoing is actually absorbed within the margin generation of the cost. I wouldn't be adding GBP 60 million to the underlying costs as a consequence.
Okay. Thank you. Over here, and then we're back here. Oh, sorry, I was going there first. I beg your pardon. It's my signalings are falling. Sorry. Gentleman on the right-hand side. You have a very good question, sir.
Yeah, hi. Tasha from Goldman Sachs. Just on B&Q, it seems the like for like has been underperforming some of the listed peers. Is there anything apart from range changes and installation issues going in the B&Q that might be impacting the performance there?
The B&Q in particular?
Yeah.
Well, I'll ask Graham. I think those are the three we've called out, Brexit, the installation disruption, and kitchens. Any other things you'd like to add? Do we have Jamie?
Kind of just add on the B&Q, the digital part as well. It just only grew 10%, I'd say, or something.
Yeah, we put a new platform in.
I think, obviously, the economy is something that we're aware of. I think what we have been doing is really getting our house in order and really getting fit. The installations was a decision we took. I think it was the right decision at the time. We were not technically set up. We didn't have a product range. We were not giving our customers a good service, and we weren't making money out of it. I think it was the right decision for B&Q, and I think what we've got to do is get our new kitchen range in. Get our supply and logistics properly set up, and then maybe look at where we go on installations in the future.
I'd rather get the base elements in first to get ourselves really fit and ready, be famous for doing a great service, great product, and then building that. I think on digital, as you probably know, having come from Screwfix, I've got a great passion, and I think the work that I'm doing with John Mewett at Screwfix, where we really have a great opportunity to push forward there. As you know, it's all about getting the base elements in there, the technical fulfillment, and we've got a great opportunity there, I think, in the future, and we're making great strides forward in that. We have had a lot of disruption this year. We have changed probably over a third of our store, which has led to a lot of disruption. We're just coming through that, apart from kitchens.
We've worked hard at clearing the stock as well as getting the new range in, and really trying to minimize the impact on the customers. The thing we're looking forward to now is really being able to sweat that new product, and drive forward a better performance in the future.
Just one question on unique unified ranges. Thanks for that. Basically, does it look like the growth has slowed down in unique unified ranges? It was growing close to 2% last year, broadly flat, this in the first half of this year. Is it all linked to the Castorama issues or how these ranges are being accepted in the rest of the?
Sorry, I missed the question.
Unique and unified ranges growth was close to 2% last year, and it's close to broadly flat 40 basis points up this year. Is there something specific happening in the growth in the unique unified ranges?
Not that I'm aware of.
No. There's no issues. I think if anything, the growth is sort of, as we've seen across both unified and non-unified, some of the disruption that we've had in France in terms of the supply chain, some of the competitive issues and some of the disruption we've had across the business. It's not something specific to unified ranges that's changed.
Sure.
At the end of the day, unified is still growing versus non-unified.
Thank you.
I think we were down here next.
Okay.
If we can move on.
Thank you. Morning. Richard Chamberlain, RBC. Can we just touch on Eastern Europe? I think it looks like the growth in Poland has slowed in the second quarter. I'm wondering if you can just give the reasons for that and also in Romania, how much the Praktiker integration contributed to the losses we saw there?
Okay. I think in the second quarter, there was more some comparatives quarter on quarter, I wouldn't say we're not seeing it as a slowing. They actually had new store openings and a couple of events taking place in the quarter, which are more standalone, it's not a slowing of the overall business. In terms of Praktiker, it has proved challenging. The businesses aren't integrated. As I said in my presentation, there's a lot of transitional work still taking place, and that'll go into next year as well. It's taking longer and taking more time. Once they've integrated the two businesses and they can actually manage their inventory and everything better, I think their execution will improve. It's still, as I said, in transition over the next 6-12 months. It has been the drag on earnings in the short term.
Okay. Thanks.
Thanks.
Can I just ask a follow-up on Castorama France, the digital offer, where you think you are on that journey to improve the customer experience, things like functionality and search optimization and so on, and when we can expect?
All right.
sales uplift from that?
Our digital upgrades have come out in a series of releases. Graham has just been in the latest one, which actually did give us some clunky moments when that was going in in the spring. There was a bit of impact from that. That's now working a lot better. If you look at the NPS, because we also measure the NPS via digital customer reaction, and that's rising. I'd say it's rising from a low start, in both B&Q and Castorama. I think, yes, it's better. The sales have been rising in all our business units, including Castorama, but it starts from a long way back, and there's still a lot we can do.
I think the next release that we put into the B&Q release that we've done this spring, I think is scheduled for, I'm going to get this wrong, next spring in Casto. It'll be coming, but probably six months now. We have to line everything up with all the other questions we've asked today about how do we sequence the change program, because there's no doubt that the compound effect of the changes in France have been what's really hurt us. If you just track the individual activities, you don't actually see the compounding effect till it's late in the game. I think what we need to do is to go back, as we said, and look at how we're sequencing these change programs so that we're not submerging our people continually with more change.
It's just how we do it, and I think the current forecast is for that, but we'll review that. Hopefully it'll be there because it's fairly discrete work. Yeah, it should improve from there. A long way to improve. Big opportunity. The gentleman behind.
Two more.
Yeah, two more. No, it's only there.
No, you first.
Okay. Three more. Three more quick ones. One, two, three.
Adam Cochrane, Citi. Can you explain the moving parts of the gross margin guidance of flat for the full year versus up for the first half, if you can? Secondly, I'm trying to rack my brains as to, you talked about dual running costs, clearance. What is the sort of underlying profitability of the business? How much dual running costs are sitting in there? How much of your gross margin is being negatively impacted? I can't quite get a feel for what it should look like at the end.
Two questions. Full-year guidance.
I think, first on the margin there. I think the primary drivers there is the ongoing clearance. As we've said, we've actually updated our guidance in terms of clearance. The second part is just the ongoing disruption, particularly around Castorama France. We don't expect that to change materially over the short to medium term, as we're sort of working through a number of the issues we're talking about. There's a third element to that too, is that we don't expect to get the same level of before clearance and disruption cost because we've got the annualization of both the installation and removal in B&Q, and also the RO value or the price repositioning in France that annualizes at the end of Q3.
There's less positives coming through.
Less positives and two main negatives coming through.
Fine.
Okay. Underlying profitability, we don't have a calculation on that at this point. It's large. Does that help?
I think it'd be fair to say there's significant unlocked potential and value once we remove a number of these impediments, clearance being normalized, removing the supply chain and logistics issues, getting our fulfillment in place and getting digital in place. We're currently working through a three-year plan analysis at the moment, which we'll be going to with Thierry. I'm sure that Thierry will actually have a number of inputs into that. The business going forward is something we'll be working to over the next three to six months.
We agree it would be helpful to have some visibility of that. Point taken. 10 minutes left.
Thank you. Alasdair McKinnon, Scottish Investment Trust. Thanks for today's presentation. Look, I get the fact it's been several years of pain unifying everything. What I wondered, though, was with Thierry's arrival, whether there's an opportunity to step back a level at the board level and say, "Is this the right way forward? Is this what the customer wants?" Is there a way to look at the portfolio of assets and say, perhaps different countries want different things, perhaps there's a different way of doing it. I know that one won't be popular because of the journey we've been on, but I just wonder what your thoughts on why you think a unified offering across different geographies will work. What can you point to to say it works?
Well, I think it's a great question. As I said at the start of the presentation, Thierry has no handcuffs on. He can come and he can look. We're operating to a business that it's common sense in any business that you make the best of your assets, however you then have to define that to be. We definitely want to try and get a return from the investments we've made, and we think that some of the things we've done are certainly obvious ways to improve the efficiency of the business as it's composed. I think Thierry will come in and take a full view and a good look at everything. We need to have some priorities of resource allocation. We need to think through that.
That's going to be part of the process that we're going to be going through with the board, with Thierry's input over the next few months. I think there are evidence points that it's always a balance. This is not an act of faith. This is about finding the right pragmatic balance between what you know you can unify and get benefit from, where customers are happy with the innovation you bring. The fact that it's unified is neither here nor there. It can be unified, and the advantage is seen in better pricing and unique attributes of the product. You improve the product, you drop the price, and it's a product category that is insensitive in terms of customer loyalty. Those exist. We have large amounts of our range that exist like that.
Finding the balance between those products and how much local product we have in international again is back to this question. We need to continually test and make sure that we are serving our customers, and I'm sure Thierry would agree with this, with what they want, and finding the places where we can get the efficiencies out with no detriment, if not an improvement in the customer offer. It's a balance, and we'll see where we go. I think Thierry's arrival is opportune. I think it's a good opportunity to get a completely fresh perspective, and we'll be back to talk to you about that.
Thank you.
Last question, if we may.
Yeah. Thanks so much. Tim Sykes, Whitman Howard. Back to the business as it is. You mentioned availability, Castorama. I wonder if you could give us some sort of quantification of how bad presumably the availability is and where you think you can get it to, and what you measure with availability. Second point, on the unique offer where you've got 150 basis points of gross margin benefit, is that a net figure? Have you sort of retained all of the benefit or, I presume there's some pass-through in price as well as retention in the gross margin. Can you give us some sort of sense of that?
I think I must say on the 150 basis points, it is gross. I think they're stretching it out there. As you can see in our margin, we haven't been able to retain all of that. There is some CPI and inflation coming through there we're trying to actually offset. Not all of it gets retained. It's again dissipated, some of it through supply chain. As we've said, too, the ways of working now is that under the new operating model, we are actually owning more of the supply chain, particularly from the Far East, though we're not just sourcing from around the corner. There are some additional costs we're actually offsetting there.
The 150 is before those costs?
Correct.
Okay.
The availability question?
The availability, I mean, giving you in broad terms, if you're looking at what does good look like, and we can look around the group, that will sort of sit more like at 98%, 99% in terms of fulfillment. That's what we should be going for. In some cases, some of it's because things have just fallen over in some of the DCs that we're being sort of sub 95%.
Okay.
That's the heart of the issue that we're addressing. In some case, it's a disconnect in processes, the way we've actually had inventory in location, the way we've entered into the system.
Okay. Thank you.
Thank you very much. Well, thank you very much for your time this morning, ladies and gentlemen, and look forward to seeing you again soon. Thank you.