HORNBACH Buys Into a Rival's Collapse — and Refuses to Blink on Guidance

A 7.3% Q2 sales beat and a six-store Hellweg grab can't move management off its 'prudent' full-year script.

HBH.DE · Earnings Call · 2026-09-29

A strong half the market isn't allowed to celebrate

HORNBACH's fiscal first half (March–August) read like the rare European retailer compounding through a subdued consumer. Group net sales rose 6% to roughly EUR 3.8bn; second-quarter sales jumped 7.3%, and like-for-like sales — the number that actually measures the stores — grew 5.4% in Q2 and 4% over the half. Adjusted EBIT climbed 4.9% to EUR 286m, with the quarter up 12.8%. Management says it 'once again outperform[ed] the European DIY industry.' Then it did nothing with it. Net sales guidance stayed 'at or slightly above' last year; adjusted EBIT 'roughly at the previous year's level' — the same wording issued in May. That gap, a genuinely strong half against a frozen outlook, is the spine of this call. The keyword layer shows why. The strategic vocabulary is unchanged and comfortable — expansion strategy, organic expansion, a diversified European footprint — but the freshest phrases are cost and friction: preopening costs, logistic costs, geopolitical tension.

The preopening costs are indeed one of the part when -- why we stay at our previous guidance. But the most important one is the geopolitical tensions. So we see higher transportation costs, longer transit times and sometimes occasional capacity constraints, which means for us, there are a lot of tension on the margin, especially the logistic costs.
Joanna Kowalska, Unknown (likely senior management or finance executive presenting results) · 2026-09-29

That is HORNBACH cast as a downstream casualty of themes it does not control — the same Middle East conflict, high fuel and freight stress that dominated the cross-market keyword boards earlier in the year — surfacing as a gross margin that slipped to 34.6%, below prior year.

The Hellweg reversal

Nine months ago this was hypothetical. On the December 2025 call, Berenberg's Ben Thielmann asked whether competitor Hellweg's store closures could be a tailwind. Management was pointedly noncommittal: “Whether it will come from Hellweg or other, we have no plans at the moment.” — Joanna Kowalska, Unknown (likely Executive or Senior Management) · 2025-12-19 Now there is a plan. “we will take over 6 of these locations in key German regions. All stores are leased properties.” — Joanna Kowalska, Unknown (likely senior management or finance executive presenting results) · 2026-09-29 The Hellweg stores come with no land purchase — CapEx is limited to remodelling, store equipment and vehicle fleet — with transfer planned for December 2026, subject to German Federal Cartel Office review, and reopening under the HORNBACH brand in spring 2027. Management pegged the average store at roughly 10,000 sqm, smaller than the HORNBACH norm but, they insist, a format they already run. This is the clearest 'what changed': the same Hellweg opportunity they publicly declined to chase three quarters ago, now executed. Opportunism or necessity, the company has reversed itself.

A basket-size tell and a vanished lever

The most revealing exchange was small. DZ Bank's Thomas Maul noted basket size grew 2.4% in Q1 but only 1.9% across H1 — implying a second-quarter decline. Management's answer was a shrug about mix: “The basket size is -- or the average basket size is always a mix of the countries, but also a different assortment... this is a mix of regional different basket size and also product mix.” — Joanna Kowalska, Unknown (likely senior management or finance executive presenting results) · 2026-09-29 That is basket size decelerating just as e commerce sales and footfall carry the top line. And note what quietly disappeared. In September 2025, management leaned hard on private label and the everyday-low-price strategy as the margin engine: “we improved our margin at, of course, in connection with the -- with our innovative product” — Joanna Kowalska, Chief Financial Officer (CFO) · 2025-09-30. This quarter, private label is essentially absent from the script — even as gross margin compresses on logistics and purchase prices. When the margin driver you used to cite most loudly goes unmentioned in the quarter it is most needed, that is a signal worth flagging.

What's left, and what it costs

The balance sheet earns its keep. Net financial debt fell 13% to EUR 1.2bn, the equity ratio rose to 45.8%, and free cash flow after CapEx and dividends reached EUR 195m. CapEx of EUR 121m is up EUR 13m, and management warned free cash flow will fall next year as Serbia gets built — “our plan is to open the stores very, very quickly” — Joanna Kowalska, Unknown (likely senior management or finance executive presenting results) · 2026-09-29, with a first Serbian store at the end of 2027 and one or two more in 2028. That is the real portfolio tension underneath a placid headline. Serbia is land-and-building CapEx, heavy but, in management's telling, high-return and uncontested; Germany's Hellweg deal adds stores with almost no asset outlay. Management insists capital discipline governs both and the dividend policy holds. But the investment phase is deepening precisely as DIY demand stays soft and European consumer sentiment remains subdued — which is exactly why guidance was reaffirmed rather than raised. A solid operator with a fresh, self-reversed expansion story; the story in the numbers is that strength is being quietly reinvested into stores rather than handed back.