HORNBACH Holding AG & Co. KGaA Q2 Earnings Call Highlights

Key Points

• Sales and earnings increased: Second-quarter sales rose 7.3% to €1.8 billion, while first-half sales grew 6% to €3.8 billion. First-half adjusted EBIT increased 4.9% to €286 million as HORNBACH gained market share across its European markets.
• Digital and expansion initiatives progressed: First-half e-commerce sales grew 8.6%, with click-and-collect up 19%. HORNBACH plans to reopen six former Hellweg stores in Germany in spring 2027 and is preparing its first Serbian store for late 2027.
• Guidance was maintained amid cost pressures: Despite stronger results, the company expects full-year sales to be flat to slightly higher and adjusted EBIT to remain roughly unchanged. Rising logistics, sourcing and expansion costs are expected to pressure margins and free cash flow.

HORNBACH Holding AG & Co. KGaA ETR: HBH reported higher sales and adjusted earnings for the second quarter and first half of fiscal 2026/27, citing continued market-share gains across Europe despite subdued consumer sentiment, geopolitical uncertainty and rising logistics costs.

The reporting period covered the six months ended Aug. 31, 2026. Chief Financial Officer Dr. Joanna Kowalska said the group’s product-focused model, diversified European footprint and investments in its store network supported performance through the spring and summer season.

“Following a good Q1, the positive trend continued over the summer season,” Kowalska said. “We delivered strong quarterly results against this challenging backdrop.”

Sales Growth Outpaces DIY Market

Group net sales rose 7.3% year over year in the second quarter to €1.8 billion. First-half sales increased 6% to €3.8 billion. Like-for-like sales, excluding newly opened locations, grew 5.4% in the second quarter and 4% in the first half.

HORNBACH Baumarkt AG sales increased 5.9% to €3.6 billion in the half year. Sales in markets outside Germany grew 7.7% and represented 54% of Baumarkt sales, while German sales rose 3.8%. The Baustoff Union building-materials business recorded an 8.6% sales increase, supported by improved building-sector conditions and one new location.

Kowalska said the company outperformed the German DIY sector during the period and either matched or outpaced sector performance in Europe. HORNBACH also said it increased market share in every country for which data was available.

The company highlighted its position in Czechia, where its market share exceeded 40%, as well as continued gains in the Netherlands and Switzerland. It also reported market-share gains in Germany and Austria, two highly competitive markets.

Footfall increased 3.5% during the first half, while average basket size also rose. In response to an analyst question, Kowalska said the basket-size trend reflected differences among countries and product categories.

• Like-for-like sales in other European markets rose 4.8% in the first half.
• German like-for-like sales increased 3.2%.
• The Netherlands recorded nearly 10% growth, while Slovakia and Czechia also delivered strong growth.
• Romanian consumer spending remained affected by inflation concerns and weak economic growth, though management said it expects conditions to stabilize in the short term.

Online Sales and Earnings Improve

E-commerce sales increased €39 million, or 8.6%, in the first half. The online share of HORNBACH Baumarkt sales reached 13.5%, with direct-delivery sales increasing 4% and click-and-collect sales rising 19%. Kowalska said e-commerce sales have doubled from pre-pandemic levels.

Gross profit rose 5%, or €63 million, to €1.3 billion in the first half. Gross margin declined from the prior-year period to 34.6%, however, as increased logistics costs and higher purchasing prices weighed on profitability.

Total costs increased €38 million, or 4.9%, amid store-network expansion, personnel expenses, higher store operating costs, information-technology infrastructure spending and transformation projects including the SAP S/4HANA migration. Total personnel costs rose 4.9% to €609 million, largely reflecting additional employees at new stores and salary increases.

Adjusted EBIT rose 12.8% in the second quarter. For the first six months, adjusted EBIT increased 4.9% year over year to €286 million, according to the company. Other European markets accounted for 64% of adjusted EBIT, while Germany represented 36%.

Hellweg Stores Add to Expansion Plans

HORNBACH plans to take over six leased former Hellweg locations in key German regions beginning in December 2026, subject to review by Germany’s Federal Cartel Office. The company aims to reopen the stores under the HORNBACH brand in spring 2027.

Kowalska said the transaction would require limited additional capital expenditure for remodeling, store equipment and vehicle fleets, along with pre-opening expenses in the mid-single-digit millions of euros during the fourth quarter. These costs will include inventory stocking and employee-related expenses.

Two locations will have employees transferred beginning in December, while employees for the other four stores will be hired before reopening. Kowalska said all six sites are leased, meaning HORNBACH will not acquire the buildings or land.

The acquired stores average about 10,000 square meters and are smaller than the typical HORNBACH location, according to Kowalska. She said the format is nevertheless familiar to the company and suitable for its strategy.

The group also continues preparing for expansion into Serbia. Management plans to open its first Serbian store toward the end of 2027 and currently sees potential for six to eight stores, with six included in current planning. Kowalska said the company expects one or two additional openings in 2028, while acknowledging that timing will depend on permits, construction capacity and lessons from its first entry into a new country in roughly two decades.

Cash Flow, Debt and Outlook

Operating cash flow increased to €352 million, aided by working-capital improvements and seasonal inventory reductions. Capital expenditure rose €13 million from a year earlier to €121 million, with 53% directed toward land and real estate, 34% toward store equipment and 14% largely toward software and digitization.

Free cash flow after capital expenditure and dividends totaled €195 million. The equity ratio increased to 45.8%, while net financial debt declined 14% to €1.2 billion, primarily due to higher liquidity.

The company said it used a new promissory note loan in part to refinance a HORNBACH Baumarkt bond that was redeemed early at the end of July. Kowalska said financial expenses were also affected by parallel financing arrangements and unrealized currency effects, mainly related to Romania.

Despite the strong first-half performance and what management described as a good start to the autumn season, HORNBACH maintained its fiscal-year guidance. The company continues to expect net sales to be at or slightly above the prior-year level and adjusted EBIT to be roughly unchanged.

Management said geopolitical tensions, transportation costs, longer transit times, sourcing conditions, inflation and margin pressure remain reasons for caution. Capital expenditure is expected to be significantly above the prior-year level as the company funds organic expansion, including the Hellweg locations and its European growth plans, which it said will put pressure on free cash flow.

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.

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