B&m European Value Retail Plc · LSE:BME
B&m European Value Retail — H1 FY19 Earnings Presentation
28 slides from B&m European Value Retail's earnings presentation, November 2018
Slide 1: B&M European Value Retail Interim Results Presentation
B&M European Value Retail Interim Results Presentation 26 weeks to 29th September 2018
Slide 2: Interim FY19 Group Highlights
Interim FY19 Group Highlights • Group revenues increased by 16.1% to £1,563.0m B&M UK revenues +7.1% including H1 LFL revenues +0.9% excluding the non- comparable Easter week and 0.0% otherwise 22 gross new B&M store openings in the UK and a net 15 9 gross new store openings at Heron and a net
Slide 3: Paul McDonald, Chief Financial Officer
Paul McDonald Chief Financial Officer Ref: 750493 3
Slide 4: Summary Profit and Loss
Summary Profit and Loss £ millions, 2018A H1 2019A H1 % Group Stores £ millions, 893 948 +6.2% Revenues 1,346.4 1,563.0 +16.1% Gross Profit 455.9 529.7 +16.2% % 33.9% 33.9% 3bps Operating Costs (339.8) (397.9) +17.1% Adjusted EBITDA 116.1 131.8 +13.5% % 8.6% 8.4% (19)bps Depreciation and Amortisatio
Slide 5: Group Revenue Bridge
Group Revenue Bridge £ millions, H1 REVENUE FY18A-FY19A • +16.1% overall Group revenue growth 128 1,563 • B&M UK growth + 7.1% • Annualisation of FY18 new store openings Net New Stores £81m LFL £1m • 22 new stores opened in the UK including 5 relocations. Closed 2 stores. 4 13 11 • UK LFL +0.0%, +0.
Slide 6: Continued UK EBITDA Growth
Continued UK EBITDA Growth £ millions, H1 ADJUSTED EBITDA BRIDGE FY18A-FY19A Group Margin % 8.6% 8.4% B&M Fascia 9.0% 9.5% +42bps Margin % Net New Stores 7.5 7.5 131.8 (3.1) 1.4 0.4 8.3 (2.4) (4.8) 1.0 116.1 2018A 2019A FY18 New FY19 New T&D Relocation LFL Wk 53 Heron Central Germany Costs /Closed N
Slide 7: B&M Fascia LFL Sales
B&M Fascia LFL Sales H1 FY19A COMMENTARY 2 Year Stack H1 +0.0% +3.25% p.a. • H1 LFL of +0.0% at the core B&M fascia, despite industry leading tough comparables from the previous year 7.7% • Excluding the non-comparable Easter week H1 LFL +0.9% 7.3% • Timing of gardening and outdoor product sales imp
Slide 8: Group Gross Margin Performance
Group Gross Margin Performance GROSS MARGIN (%) KEY HIGHLIGHTS • B&M UK fascia margins were 53bps higher: • Impact of reduced clearance activity in Q2 following 33.9% 33.9% strong Q1 sell through on seasonal products • Despite headwind of continued shift in the mix towards grocery/FMCG ranges, 26bps
Slide 9: Group Operating Costs
Group Operating Costs £ millions, H1 2018 H1 2019A KEY HIGHLIGHTS Store Costs 226.9 240.5 Transport and Distribution 43.3 49.5 • B&M operating costs as a % of sales are 11bps higher than Central Costs 21.9 23.6 last year New Store Pre-Opening 1.7 2.5 Total B&M 293.8 316.1 • impact of living wage mit
Slide 10: Group Interest Expenses
Group Interest Expenses £ millions, KEY HIGHLIGHTS FY18A FY19A • Interest and amortised fees relating to the bank debt Interest 9.8 10.5 Amortised Fees 0.7 0.7 Total 10.5 11.2 • We expect full year Interest charge in FY19 of c. £23m including fee amortisation following the additional loan Put/Call O
Slide 11: Strong Cash Flow Conversion
Strong Cash Flow Conversion £ millions, OPERATING CASH FLOW CASH FLOW STATEMENT £m FY18A FY19A Adjusted EBITDA 116.1 131.8 Tighter Working Capital Discipline offsetting Week 53 working capital timing differences Change in Working Capital (71.1) (64.8) New Store Capex (12.9) (14.6) 67 Infrastructure
Slide 12: Simon Arora, Chief Executive Officer
Simon Arora Chief Executive Officer Ref: 750493 12
Slide 13: UK Market
UK Market LTM British Retail Consortium LFL 4.0 3.0 2.0 1.0 0.0 -1.0 -2.0 -3.0 -4.0 -5.0 -6.0 LFL Non-Food LFL Weekly LFL at B&M Warm weather Driven Sales Stock Sold Through Period AW Product Sales Non-Comp Easter Ref: 750493 Week 13
Slide 14: Expansion in both Infill and New Regions
Expansion in both Infill and New Regions FY19 OPENINGS 591 STORES AS AT SEPTEMBER 2019 22 gross openings (net 15 stores due to 5 relocations and 2 store closures) 20 Openings expected in Q3 Approx 58 gross in the Full Year There has been a flurry of opportunities available in U.K. property market Ne
Slide 15: Heron Foods Update
Heron Foods Update HIGHLIGHTS • Heron continues to trade well on an LFL basis:- • ambient grocery is the main product category driver • driven principally by increases in basket value • We opened 9 gross stores, net 4 as a result of 3 relocations and 2 closures in H1. • We will open 20 net new store
Slide 16: New Warehouse Investment in the UK
New Warehouse Investment in the UK BUILD HAS COMMENCED KEY HIGHLIGHTS • Building work has commenced on site in Bedford for 1 million sq. ft distribution centre • Anticipate handover in May-19 followed by the internal fit out for 6-9 months • Planned soft or phased opening in Jan-20 • We propose to ‘
Slide 17: International Expansion - Germany
International Expansion - Germany SUMMARY • Delivered revenue growth of 4.1% including a return to LFL sales growth • Accelerating the pace of change to “B&M” suppliers in Asia • new management team bedded in • clearance activity is progressing well • general merchandise product range will be c. 35%
Slide 18: Acquisition of Babou
Acquisition of Babou
Slide 19: Babou in Context
Babou in Context • French Market is the second largest in Continental Europe, behind Germany. • Variety retailing has been a stable market with Action’s arrival 5 years ago being the key exception. Action’s rapid success demonstrates that there is demand for sharper price proposition on the non-food
Slide 20: Babou Distribution & Store Network
Babou Distribution & Store Network Babou stores are located out of town, 2,700m² average sales area • Average store revenues of €3.7m pa • 51 stores are adjacent to hypermarkets, 6 standalone locations and remainder on retail parks. • All stores held leasehold on conventional 6+3 years leases • Stor
Slide 21: Acquisition of Babou Background & History
Acquisition of Babou 1 Background & History • Babou was founded in 1978 by the Kleboth family and was an early mover in French non-food discount retailing. • Network of 95 stores across France, with a HQ and Distribution centre near Clermont-Ferrand in central France • Founder’s family were controll
Slide 22: Babou Customer Profile and Product Categories
Babou Customer Profile and Product Categories Gender Income Profile Age • Average 360k transactions per week 19% 33% 40% • €22 average basket (inc VAT) 49% 45% 67% 36% • 66% of items sold below €5 11% Women Men Lower Middle Inactive 13-34yo 35-49yo 50y and more Product Categories • 20% sourced from
Slide 23: Financial Profile
Financial Profile REVENUES, €M STORE #’S, END OF PERIOD 363.8 352.1 93 92 93 346.9 FY15 FY16 FY17 FY15 FY16 FY17 EBITDA, €M LFL TRADING AND GROSS MARGIN CHANGE -128bps +340bps -55bps +120 bps 5.6% 7.7% 7.1% 27.1 24.7 20.3 -0.7% -3.1% -3.3% -6.4% FY15 FY16 FY17 FY15 FY16 FY17 YTD Sep-18 % of Revenues
Slide 24: Integration Plan being Implemented
Integration Plan being Implemented FOCUS ON RANGE STRENGTHENING NEW CEO IN PLACE • Significant opportunity to improve the Babou offer for • Incumbent CEO resigned at completion and has been customers and drive growth, via targeted actions: replaced by Cédric Mahieu. • Increased direct sourcing • Céd
Slide 25: Outlook for FY19
Outlook for FY19 UK • Stable trading environment at B&M • Heron performing in line with expectations, despite annualising early wins • New store programme progressing well with gross openings of 58 and 20 for B&M and Heron respectively in FY19 Germany • Good progress in clearing discontinued slow-se
Slide 26: Appendix
Appendix Ref: 750493 26
Slide 27: Group Sales
Group Sales B&M SALES HERON SALES £ millions £ millions 2,566 210 2,252 1,903 1,526 1,272 14 15 16 17 18 14 15 16 17 18 JAWOLL SALES GROUP SALES £ millions £ millions 200 2,976 178 2,431 133 2,035 121 1,647 1,272 14 15 16 17 18 14 15 16 17 18 Ref: 750493 27
Slide 28: Group EBITDA
Group EBITDA B&M EBITDA HERON EBITDA £ millions £ millions 10.0% 10.4% 9.5% 9.9% 10.2% 5.6% 261.7 223.2 11.7 180.9 158.3 126.6 14 15 16 17 18 14 15 16 17 18 JAWOLL EBITDA GROUP EBITDA £ millions £ millions 8.8% 8.8% 6.5% 2.8% 10.0% 10.3% 9.5% 9.7% 9.4% 279.0 11.6 11.7 10.7 234.9 192.5 169.0 5.6 126.
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