B&m European Value Retail Plc · LSE:BME
B&m European Value Retail — Investor Day (June 2016)
28 slides from B&m European Value Retail's investor day presentation, Jun 17, 2016
Slide 1: Germany Analyst and Investor Day
Germany Analyst and Investor Day Hamburg, 17 June 2016
Slide 2: Today's Itinerary
Today’s Itinerary 8:45AM – 10:00AM Management Presentation & Q&A 10.15AM – 10.45AM Tour of Jawoll store in Soltau 11.00AM – 11.30AM Tour of Jawoll Distribution Centre 11.30AM – 1.00PM Lunch – drive to Stade 1.00PM – 1:30PM Tour of Jawoll Stade (smaller format store) 1.30PM – 3.00PM Travel to Hambu
Slide 3: Today's Presentation
Today’s Presentation Presenter 8:45AM – 9:00AM I. Rationale for the Jawoll Acquisition Simon Arora, B&M Group CEO 9.00AM – 9.40AM II. Jawoll’s history and growth plans Ingo Stern, Jawoll CEO Nils Hansen, Jawoll CFO III. Financial Performance Paul McDonald, B&M Group CFO 9.40AM – 10.00AM IV. Q&A Ingo
Slide 4: I. Rationale for the Jawoll Acquisition
I. Rationale for the Jawoll Acquisition 4
Slide 5: Jawoll: a good platform
Jawoll: a good platform B&M ACQUIRED 80% OF JAWOLL IN APRIL 2014, REMAINDER OWNED BY JAWOLL MANAGEMENT TEAM 1 Jawoll is a successful regional retailer that delivered consistent growth and profits 2 Jawoll business model is similar to B&M, a discount variety good retailer with significant store roll
Slide 6: Jawoll is a successful, growing business
Jawoll is a successful, growing business (€m) Jawoll opened 2 / 3 stores per year on average since 2007… …and delivered healthy margins. 56 17 48 49 50 2 45 14 41 42 12 36 182 12 163 2 27 155 154 141 143 146 9.0% 9.3% 7.6% 7.6% 113 105 1 2 1 2 2007 2008 2009 2010 2011 2012 2013 FY 2015 FY 2016 2012
Slide 7: Store roll-out opportunity exists even in Core Region
Store roll-out opportunity exists even in Core Region REASONS FOR NOT VISITING, GIVEN BY THOSE AWARE OF JAWOLL, (2014 ONLINE SURVEY, N=483) Other 16% The products are • Despite modest store footprint, there is 32% poor quality 3% 3% awareness of Jawoll brand in its Core North I prefer to visit a 12%
Slide 8: Jawoll and B&M share key structural similarities
Jawoll and B&M share key structural similarities JAWOLL MODEL IS COMPATIBLE WITH B&M’S MEANING WE CAN LEVERAGE SYNERGIES… 1 Comparable store size and locations to B&M Homestore model • Direct Sourcing in Far-East • Buying scale & relationships 2 • Merchandising know-how & Strong overlap in product c
Slide 9: Both B&M and Jawoll are similarly positioned in large markets
Both B&M and Jawoll are similarly positioned in large markets SPECIALIST RETAILERS SPECIALIST RETAILERS £129bn¹ €210bn1 £163bn¹ £7bn¹ €195bn1 €2bn1 FOOD RETAILERS GENERAL MERCHANDISE DISCOUNTERS FOOD RETAILERS GENERAL MERCHANDISE DISCOUNTERS 1 Source: Company estimates Ref: 750493 9 June 2016 – Germ
Slide 10: There is no dominant discount variety retailer
There is no dominant discount variety retailer Company Revenues Store Numbers (€m) 1 350 250 182 56 OOT 110 118 100 56 70 40 467 1,293 In- 330 300 town 116 206 95 181 66 177 Ref: 750493 1 Jawoll estimate of Retail Revenues – Thomas Philipps is a franchise business 10 June 2016 – Germany Analyst and
Slide 11: Jawoll is well positioned to expand nationally
Jawoll is well positioned to expand nationally Jawoll is a profitable business, which delivers Jawoll will increasingly target the Category attractive returns despite its current modest size specialists rather than Grocery Integration has gone well • Jawoll can now access B&M’s Far East supply chain
Slide 12: II. Jawoll's history and growth plans
II. Jawoll’s history and growth plans 12
Slide 13: The Jawoll team
The Jawoll team INGO STERN NILS HANSEN RALF HARTWICH Managing Director Finance Director Trading Director • Ingo joined Jawoll in 2000 and has been the • Nils joined Jawoll as Finance Director in 1999. • Ralf joined Jawoll in 1997 and has been the Chief Executive Officer of Jawoll since 2007. • He ha
Slide 14: Jawoll's history
Jawoll’s history COMPANY HISTORY Mr Dieter Stern opens the first Consolidation of distribution Acquisition and Integration of Introduction of a new ERP Jawoll store in Soltau between the four partners a small chain (HAFU) 1985 1987 2000 2007 2008 2009 2012 2014 Progressed integration of Association
Slide 15: Customer Profile and Shopping Behaviours
Customer Profile and Shopping Behaviours Typical Jawoll customers include two particular profiles 1 Low income earners 2 Hobby gardeners & home DIY • Average household disposable income of c.€32k in Germany1 • Gardening is amongst the most popular outdoor activities in Germany • Loyal weekly shopper
Slide 16: Product mix
Product mix BROAD PRODUCT MIX WITH A DIFFERENTIATED PROPOSITION % of net sales, FY16a • Jawoll offers more choice than limited assortment grocers with c.10,000 Food Homewares continuity lines across broad spectrum of categories 18% 23% • On average 4,000 shoppers per week per store. Grocery Drinks N
Slide 17: Well developed direct marketing program
Well developed direct marketing program • 2.6m leaflets distributed every week • Distributed every Sunday or Wednesday • Captured within store costs • Digital / social media marketing opportunities Ref: 750493 17 June 2016 – Germany Analyst and Investor Day
Slide 18: Jawoll offers compelling value
Jawoll offers compelling value 1 2.22 € 2.49 € 2.99 € 37.99 € 54.50 € 64.99 € 1.29 € 1.49 € 1.69 € 3.99 € 4.99 € 1.49 € 1.59 € 1.79 € 179 € 229€ 2 1 OBI ladder height 3.05m vs 2.8m at Jawoll Ref: 750493 2 Edeka group of companies 18 June 2016 – Germany Analyst and Investor Day
Slide 19: Existing Jawoll store estate
Existing Jawoll store estate CURRENT FOOTPRINT – MARCH 2016 TYPICAL STORE: 2,300m² + GARDEN CENTRE Breakdown of the existing stores by internal sales area 18 12 10 9 7 < 1,500m² > 1,500m² > 2,000m² > 2,500m² > 3,000m² < 2,000m² < 2,500m² < 3,000m² • All Jawoll stores have a garden centre • All Jawol
Slide 20: FY17 organic growth plans – 10 stores
FY17 organic growth plans – 10 stores PROPOSED OPENINGS ORGANIC ROLLOUT • Healthy organic pipeline, with budget of 10 openings in FY17 • 7 expected to be c.2,000m², 3 expected to be c.1,000m² • 5 openings already delivered as of 17 June 2016 • Obtaining planning consents is a constraint on speed of
Slide 21: Growth supported by Infrastructure Investment
Growth supported by Infrastructure Investment SOLTAU IS A CONVENIENT DC LOCATION WITH CAPACITY FOR GROWTH Well-located National Distribution Centre • Soltau lies centrally between Bremen, Hamburg and Hanover. • Hamburg port within one hour drive: largest in Germany, third in Europe • 30,000m² wareho
Slide 22: Future initiatives
Future initiatives 1 Introduction of Auto-Replenishment from DC as per B&M model, less reliance on Store Manager over time 2 Conversion of pre FY15 estate to B&M layout is on-going 3 On-going incremental increases in Direct Sourcing as store estate (and volumes) grow 4 Further alignment of back-offi
Slide 23: III. Financial performance
III. Financial performance 23
Slide 24: Margin comparison
Margin comparison (% of FY16 net sales) Mix effect: Jawoll sells more Non-Grocery 34.3% Gross Margin 37.9% items than B&M • Property (5.5%) (18.6%) Store costs (20.6%) • Staff (11.1%) • Marketing (2.5%) 15.8% Store Contribution 17.3% • Indirect Store overheads (1.5%) (4.0%) Transport & Distribution
Slide 25: All Jawoll stores are profitable
All Jawoll stores are profitable FY16 Store Contribution for the 50 Jawoll stores open for the full year € 1,750,000 1,500,000 1,250,000 1,000,000 750,000 Average store contribution €500k pa 500,000 250,000 0 5 10 15 20 25 30 35 40 45 50 Source: Management Accounts, IFRS Note: includes all 50 stores
Slide 26: Store payback profile (excluding FY16 openings)
Store payback profile (excluding FY16 openings) €m, IFRS, March YE COMPANY AVERAGE 1 Revenue per store €3.2m Store contribution €0.5m Net investment €0.3m Payback period 8 months Payback period incl. WC 2 22 months 1 Based on all 50 stores opened by April 2015, excludes franchised stores 2 Assumes W
Slide 27: IV. Wrap-up and Q&A
IV. Wrap-up and Q&A 27
Slide 28: Key messages
Key messages 1 The integration of Jawoll into the Group has gone well and EBITDA has grown. 2 The necessary pre-conditions for faster expansion in Germany - in terms of skills, infrastructure and a retail model which can generate attractive returns - are in place. 3 The Jawoll management team is hig