HORNBACH Holding AG & Co. KGaA (ETR:HBH) reported what CFO Dr. Joanna Kowalska described as the highest quarterly net sales in the company’s history, as the home improvement retailer opened fiscal 2026/2027 with growth despite subdued consumer sentiment and a challenging macroeconomic backdrop.
In a first-quarter update call covering the period from March 1 through the end of May 2026, Kowalska said group net sales rose 4.9% year over year to EUR 2.0 billion. She said the performance was driven by solid like-for-like sales growth in existing stores and contributions from newly opened locations, with May marking the strongest month in the company’s history.
International Business Drives Sales Growth
HORNBACH Baumarkt AG, the group’s core DIY retail business, increased sales by 4.7% to EUR 1.9 billion. Kowalska said the company benefited from its diversified European footprint, with sales in other European markets rising 7.5% and now accounting for 53% of group sales. Sales in Germany increased 1.8%.
Like-for-like sales at HORNBACH Baumarkt rose 2.8%, which Kowalska said outperformed the German DIY sector, based on data from industry association BHB. Germany recorded like-for-like sales growth of 1.0%, while other European countries posted growth of 4.4%.
Among individual markets, Slovakia delivered growth of more than 9%, the Netherlands grew just under 9%, and Czechia increased 5.6%. Kowalska said Romania was the only market showing a decline, citing temporarily weaker customer sentiment related to tax increases that affected consumer spending more broadly.
The company also said it continued to gain market share in countries where data is available. Kowalska highlighted Czechia, where HORNBACH’s market share rose above 40%, and the Netherlands, where market share increased to 40.4%. She also cited gains in Switzerland, Germany and Austria.
E-Commerce and Store Expansion Contribute
E-commerce sales increased by EUR 20 million, or 9%, during the quarter. Direct delivery remained the largest part of the company’s online business and grew 5%, while click-and-collect sales rose 18%. E-commerce represented 13.6% of HORNBACH Baumarkt sales in the quarter.
Kowalska said HORNBACH has nearly doubled e-commerce sales compared with the pre-pandemic period and attributed the progress to the integration of online services with physical stores.
The company opened a new store in Trnava, Slovakia, during the quarter. In response to a question from Baader Bank analyst Volker Bosse, Kowalska said two additional openings are planned for autumn: one in Vloeren in the Netherlands and another in Graz, Austria.
Profit Holds Steady as Costs Rise
Gross profit increased by EUR 27 million to EUR 700 million, while the gross margin declined slightly to 35.0%. Kowalska said sales growth supported gross profit, but margins were pressured by logistics challenges and higher purchase prices tied to the current geopolitical environment.
Adjusted EBIT was EUR 161 million, broadly in line with the prior-year period. Kowalska said there were no non-operating effects requiring adjustment in the first quarter. Countries outside Germany accounted for 62% of adjusted EBIT, up two percentage points from the prior year.
Total costs rose EUR 27 million, or 5.2%, but were offset by higher gross profit. Selling and store costs increased due to new stores and higher operating costs, including maintenance, cleaning and payment transaction costs. General and administrative costs also increased, driven by personnel expenses and IT infrastructure investments.
Total personnel costs across cost categories were about EUR 370 million, up 5.5%. Kowalska said the increase reflected both higher headcount from new stores and salary increases. In the Q&A, she said the company has planned for roughly 4.4% growth in personnel costs for the full year, though she noted the outcome of German trade union negotiations remains uncertain.
“We are committed to finding the right balance between investment in our people and maintaining the cost discipline,” Kowalska said.
Cash Flow, Debt and Capital Spending
Operating cash flow rose slightly to EUR 199 million, mainly due to higher funds from operations. Capital expenditures increased by EUR 11 million to EUR 56 million, consistent with the company’s organic growth strategy. Kowalska said 46% of investments related to land and real estate, mainly for new store locations, while 34% went to store equipment for new and existing stores. The remainder was invested mainly in software, including the company’s SAP S/4HANA migration.
Free cash flow after capital expenditures and dividend payments was EUR 143 million. The company said financing cash flow was elevated due to a new promissory note loan that will be used to refinance a HORNBACH Baumarkt bond set for early redemption at the end of July.
The balance sheet total increased to EUR 5.3 billion due to the new loans, while the equity ratio declined to 42.3%. Net financial debt fell 9.2%, mainly because of higher liquid funds. The leverage ratio, defined as net debt to EBITDA, was 2.5 and below the year-end level.
Asked by Berenberg analyst Michael Heider about capital spending, Kowalska reiterated that CapEx is expected to be higher than last year but declined to provide more detailed figures. She said the company has “many opportunities and also many options to invest” this year.
Guidance Confirmed Despite Margin Pressures
HORNBACH confirmed its guidance for the full fiscal year. The company expects group net sales to be at or slightly above the prior-year level, while adjusted EBIT is expected to be roughly in line with the previous year.
Kowalska said the company saw a good customer response in the first weeks of the second quarter and expects to benefit from selling days that were missing in the first quarter. However, she also pointed to ongoing uncertainties, including logistics challenges, higher raw material prices and unresolved wage negotiations in Germany.
In response to Heider’s question about pricing, Kowalska said supply chains from Asia continue to face longer lead times and higher container rates, while suppliers are increasingly seeking price increases. She said the pressure particularly affects freight-intensive product ranges, including building materials, garden construction materials and oil-based products.
“The pressure on the gross margin is expected to continue in coming quarters at a similar level,” Kowalska said, while emphasizing that the situation remains volatile.
Baustoff & Union also contributed to group growth, with sales increasing 6.8%. Kowalska said the improvement was driven primarily by existing locations, along with an acquisition in St. Wendel. She noted some recovery in the building sector but said conditions remain tense.
Overall, Kowalska said the company remains committed to controlled organic expansion and sees medium- and long-term growth potential in the home improvement sector.
About HORNBACH Holding AG & Co. KGaA (ETR:HBH)
HORNBACH Holding AG & Co KGaA, through its subsidiaries, develops and operates do-it-yourself (DIY) megastores with garden centers in Germany and other European countries. Its stationary stores offer hardware/electrical, paint/wallpaper/flooring, construction materials/timber/prefabricated components, sanitary/tiles, and garden hardware/plants. The company also provides a range of construction materials and tools stocked and supply services, as well as professional advice for various product ranges and lines of trade, including shell construction and roofing; interior fittings and facades; and civil engineering, and garden and landscape construction materials for construction, conversion, or refurbishment projects.
