HORNBACH Q1 2025/26 slides: Sales and profits surge on strong spring season

HORNBACH Holding AG & Co. KGaA reported robust Q1 2025/26 results, with consolidated net sales rising 5.7% to €1,909.2 million and adjusted EBIT increasing 10.4% to €161.7 million, largely attributed to favorable Central European weather. The home improvement retailer achieved significant market share gains and strong e-commerce growth, with digital sales comprising 13.1% of total net sales, alongside substantial improvements in operating and free cash flow. Despite this strong start, the company maintained its full fiscal year guidance, suggesting a cautious outlook for potential headwinds while continuing strategic investments in expansion.

Analysis

HORNBACH Holding AG & Co. KGaA (HBH) reported a robust start to the 2025/26 fiscal year, with Q1 consolidated net sales growing 5.7% to €1,909.2 million and adjusted EBIT increasing 10.4% to €161.7 million. This performance was significantly aided by temporary factors, including favorable weather conditions across Central Europe and 1.2 additional business days, which boosted customer traffic and spending. Beyond these tailwinds, the company demonstrated strong underlying fundamentals by capturing additional market share across all key regions, with notable gains in Germany (+0.6pp to 15.6%) and Czechia (+1.5pp to 38.6%). The firm's digital strategy continues to yield results, as e-commerce sales grew to 13.1% of total revenue. Operationally, HORNBACH achieved a substantial improvement in financial health, evidenced by operating cash flow surging to €192.0 million from €58.3 million year-over-year, and a reduction in net leverage to 2.3x. Despite the strong quarterly beat, management maintained its full-year guidance, projecting sales and EBIT to be roughly level with the prior year. This cautious stance signals an anticipation of headwinds or a normalization of performance in the coming quarters, tempering the positive Q1 results.

Key Decisions for Investors

• Investors should weigh the exceptional Q1 results against the company's unchanged full-year guidance, which implies that the performance driven by favorable weather is not expected to be sustained.
• Consider the company's proven ability to gain market share in a competitive environment and its successful e-commerce expansion as key indicators of its long-term strategic strength.
• Monitor the company's capital allocation, as the significant increase in free cash flow is funding a doubling of CAPEX for store expansion and modernization, which could be a primary driver for future growth.
• Pay close attention to like-for-like sales figures in subsequent quarters to gauge underlying consumer demand absent the temporary tailwinds experienced in Q1.