Earnings call transcript: Hornbach's Q2 2025 sees solid sales growth

Hornbach Holding AG & Co. KGaA reported solid first-half fiscal year 2025/2026 results, with group net sales rising 4.4% and like-for-like sales up 3.6%, driven by strong e-commerce growth and market share gains across Europe. Despite an improved adjusted EBIT of 2.5% and confirmed full-year guidance, the company's stock declined 4.94% in pre-market trading, indicating investor caution amid persistent macroeconomic pressures in the DIY sector and rising personnel expenses, even as management expressed confidence in its resilient business model and strategic execution.

Analysis

Hornbach Holding AG & Co. KGaA demonstrated robust operational performance in H1 2025/2026, with group net sales increasing 4.4% and like-for-like sales growing 3.6%, outperforming the broader German DIY sector which saw a 0.7% decrease. This growth was driven by a 3.3% increase in customer frequency, market share gains across all regions including a 0.6 percentage point rise in Germany to 15.5%, and a significant 10.1% expansion in e-commerce sales. Despite these strong top-line results and a 2.5% increase in adjusted EBIT, the company's stock fell 4.94% in pre-market trading, indicating that investor sentiment is heavily weighed down by persistent macroeconomic pressures and rising costs. Specifically, personnel expenses rose 5.7% due to wage increases, a key headwind to profitability. The company maintained a solid financial position, with an equity ratio of 46.9% and an improved net debt-to-EBITDA ratio of 2.4. Management expressed confidence by confirming its full-year guidance and anticipating adjusted EBIT to land in the upper half of the guidance range, signaling belief in its ability to navigate soft consumer sentiment through strategic execution.

Key Decisions for Investors

• The 4.94% pre-market stock decline, in contrast to strong sales growth and an upgraded EBIT outlook, suggests a potential valuation disconnect; investors should evaluate if current market sentiment excessively discounts the company's demonstrated operational resilience and market share gains.
• Investors should closely monitor the impact of rising personnel expenses, which grew 5.7%, on operating margins and track like-for-like sales in the core German market, as these are the primary risks tempering the positive results.
• Given the confirmed full-year guidance and strategic strengths like 10.1% e-commerce growth, a long-term position could be initiated, viewing the current cautious sentiment as a potential entry point for those confident in management's ability to navigate the challenging consumer environment.