B&m European Value Retail Plc · LSE:BME
B&m European Value Retail — H1 FY20 Earnings Presentation
28 slides from B&m European Value Retail's earnings presentation, November 2019
Slide 1: B&M European Value Retail Interim Results Presentation
B&M European Value Retail Interim Results Presentation 26 weeks to 28th September 2019
Slide 2: FY20 Group Highlights
FY20 Group Highlights • Group revenues increased by 21.6% to £1,903.4m B&M UK LFL revenues +3.7% 30 gross new B&M store openings in the UK and a net 25 10 gross new store openings at Heron and a net 9 £144.1m revenues from Babou and opened 3 stores branded B&M Disappointing performance in
Slide 3: Paul McDonald, Chief Financial Officer
Paul McDonald Chief Financial Officer Ref: 750493 3
Slide 4: Summary Profit and Loss – Pre and Post IFRS16
Summary Profit and Loss – Pre and Post IFRS16 £ millions, FY19A FY20A % Change Group Stores 948 1,131 19.3% Revenues 1,565.9 1,903.4 21.6% Gross Profit 529.7 651.6 23.0% % 33.8% 34.2% 41bps Operating Costs (397.9) (512.4) 28.7% Pre IFRS 16 Basis Adjusted EBITDA 131.8 139.2 5.7% % 8.4% 7.3% (110)Bps
Slide 5: Group Revenue Bridge
Group Revenue Bridge £ millions, H1 REVENUE FY19-FY20 • +21.6% overall Group revenue growth • B&M UK growth +13.8% Net New Stores £127m 144 1,903 • Annualisation of FY19 new store openings 44 8 4 13 • 30 gross new stores opened in the UK including 4 38 relocations. Closed 1 store. 89 1,566 (3) • UK
Slide 6: Group EBITDA Bridge – Continued Growth
Group EBITDA Bridge – Continued Growth £ millions, H1 ADJUSTED EBITDA BRIDGE FY19-FY20 Group Margin % 8.4% 7.3% B&M Fascia 9.4% 9.4% +2bps Margin % 6.8 5.2 9.1 (4.5) (0.0) 1.8 139.2 2.4 131.8 (13.3) 2019A FY19 New FY20 New Net Relocations LFL Central Germany Heron France 2020A / Closed Ref: 750493 6
Slide 7: B&M Fascia LFL Sales
B&M Fascia LFL Sales FY20 H1 COMMENTARY FY20 H1 • H1 LFL sales growth of +3.7% +3.7% • There has been growth in both customer numbers and average transaction values 3.9% 3.5% • Both town centre and out of town locations have delivered LFL growth • LFL’s benefitted from improvements in homeware categ
Slide 8: Group Gross Margin Performance
Group Gross Margin Performance GROUP GROSS MARGIN (%) KEY HIGHLIGHTS • B&M fascia margins were 2bps higher than last year 33.8% 34.2% • Despite headwind of further shift in the mix towards grocery / FMCG ranges, albeit this is reducing • Offset by strength of homeware categories • Heron margins were
Slide 9: Group Operating Costs
Group Operating Costs £ millions, KEY HIGHLIGHTS FY19 FY20 B&M 316.1 358.0 • B&M fascia operating costs lower than last year as a % of Heron 45.4 47.2 revenues Germany 36.4 50.0 • Impact of living wage mitigated through productivity gains France - 57.2 Adjusted Costs exc IFRS16 397.9 512.4 • Some im
Slide 10: Group Interest Expenses
Group Interest Expenses £ millions, KEY HIGHLIGHTS FY19 FY20 • Interest and amortised fees relate to the bank debt and Interest 10.5 11.3 bonds Amortised Fees 0.7 1.2 Total 11.2 12.5 • We expect full year Interest charge in FY20 of c. £24m Put/Call Option 0.5 - including fee amortisation following t
Slide 11: Cash Flows Pre-IFRS16
Cash Flows Pre-IFRS16 £ millions, OPERATING CASH FLOW CASH FLOW STATEMENT £m FY19A FY20A 82 Adjusted EBITDA 131.8 139.2 67 Change in Working Capital (64.8) (56.8) New Store Capex (14.6) (25.1) Infrastructure Capex (2.9) (20.7) Maintenance Capex (12.8) (23.8) 27 Freeholds (9.7) (10.4) Total Capex (40
Slide 12: Simon Arora, Chief Executive Officer
Simon Arora Chief Executive Officer Ref: 750493 12
Slide 13: B&M Revenues Outperform BRC LFL Data
B&M Revenues Outperform BRC LFL Data B&M performance FY19 Q4 LFL FY20 Q1 LFL FY20 Q2 LFL Sales +5.8% Sales +3.9% Sales +3.5% 3.7% 1.8% Market performance 0.1% -0.1% -0.5% -1.1% -1.6% -1.7% -3.0% Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Ref: 750493 Source: BRC Monthly LFL (Figur
Slide 14: Discount Shopper Attitudes
Discount Shopper Attitudes Which of the following statements about shopping apply to you? (% of respondents) I am using discount stores more often: I am using discount • Higher among women (51%) than men (44%) stores more often • Highest for older consumers; those aged 55-64 (55%) and those with chi
Slide 15: B&M Outperforming Peers on Shopper Perceptions
B&M Outperforming Peers on Shopper Perceptions For each of the following store attributes which do you associate with each of the following retailers stores? (% of respondents) Very good prices 70 60 No queues Convenient location 50 B&M 40 30 Discount Variety Retailer A 20 Discount Variety Retailer
Slide 16: Most Categories Generating Strong LFL Growth
Most Categories Generating Strong LFL Growth Performance byLFL category H1 FY20 CATEGORY SALES % H1 FY20 CATEGORY LFL MARGIN % A A B B C C FY20 H1 LFL FY20 H1 LFL Cash Margin D Sales +3.7% D +4.0% E E F F G G H H I I J J K K L L M M N N O O (20.0%) (15.0%) (10.0%) (5.0%) 0.0% 5.0% 10.0% 15.0% (20.0%
Slide 17: Case Study: Home Department
Case Study: Home Department COMMENTARY • Homeware categories underperformed in FY19 • The category is now back on track having invested additional buying and design resources in Summer 2018 • March 2019 saw the launch of new ranges and implementation of new visual merchandising principles • This cat
Slide 18: New Store Programme
New Store Programme FY20 OPENINGS 645 STORES AS AT SEPTEMBER 2019 • 30 gross openings (net 25 stores due to 4 relocations UK Store and 1 store closures) Target 950 Stores • Consistent high store returns • Healthy pipeline for FY20 of 46 net new stores and promising pipeline for FY21 KW Key: Each pos
Slide 19: Case Studies: Southern Stores
Case Studies: Southern Stores CASE STUDY: WILTSHIRE CASE STUDY: WEST SUSSEX H1 FY20 H1 FY20 £m £m Revenue 5.2 Revenue 4.2 Gross Margin 1.9 Gross Margin 1.5 Store Costs (0.7) Store Costs (0.6) Store Contribution 1.2 Store Contribution 1.0 Store Contribution % 23.0% Store Contribution % 23.5% Company
Slide 20: Case Study: Relocation
Case Study: Relocation CASE STUDY: LEICESTERSHIRE COMMENTARY ‘First Generation’ 2009 Bargain Store: • Very typical market town in Leicestershire, (Central England) FY19 with a c. 30,000 population £m Revenue 1.4 • Our first store opened in November 2009 with a sales area Store Contribution 0.05 of 5
Slide 21: Marketing Update
Marketing Update INSTAGRAM FOLLOWERS OCTOBER 2019 000’s 636 431 343 337 226 176 141 Ref: 750493 21
Slide 22: Heron Foods Update
Heron Foods Update HIGHLIGHTS • Heron performance continues to be pleasing • Positive LFL performance in H1 despite strong comparative of c.+7% in H1 FY19 • New store opening programme is progressing well, opened 10 gross stores in H1 and on track to open 20 stores in FY20 • We will review whether t
Slide 23: New Warehouse Investment in the UK
New Warehouse Investment in the UK BEDFORD SOUTHERN DC KEY HIGHLIGHTS • Base build completed in July 2019 • Building fit out all on track and in line with budget for full commissioning in January 2020 • Picking operations have commenced at the facility in September 2019 to service 50 stores for groc
Slide 24: Babou Progress to Date
Babou Progress to Date LEMPDE, FRANCE B&M STORE COMMENTARY • Babou generated £1.8m of EBITDA in H1 • Clothing and Footwear currently 25% of sales, down from c.40% • Food/FMCG approximately 10% of sales • B&M sourced product now fully deployed in stores • Good product availability • Some inherited le
Slide 25: Capital Structure
Capital Structure DE-LEVERAGING PROFILE CAPITAL ALLOCATION FRAMEWORK • Leverage at Sept-19 on an LTM basis is 2.18x and this reduces to 1.83x excluding the expenditure on Southern STORE ROLLOUT Distribution Centre and store freeholds • Potential sale and leaseback of DC investment company and freeho
Slide 26: Outlook for FY20
Outlook for FY20 UK • B&M UK stores delivering positive LFL sales growth, but impact of political uncertainty is difficult to predict. Stores are nicely set up for Golden Quarter trading • Heron trading well, despite a flat market in grocery and price inflation pressures easing. Continue to be pleas
Slide 27: IFRS16 Profit and Loss Account Reconciliation
IFRS16 Profit and Loss Account Reconciliation Appendix 1 £ millions, Pre FY19 IFRS16 Post FY19 Pre FY20 IFRS16 Post FY20 Revenues 1,565.9 - 1,565.9 1,903.4 1,903.4 Gross Profit 529.7 529.7 651.6 651.6 Operating Costs (397.9) 79.1 (318.8) (512.4) 97.0 (415.4) Adjusted EBITDA 131.8 79.1 210.9 139.2 97
Slide 28: IFRS16 Cash Flow Reconciliation
IFRS16 Cash Flow Reconciliation Appendix 2 £m FY19A FY20A Adjusted EBITDA 131.8 139.2 Change in Working Capital (64.8) (56.8) Capex (40.1) (80.0) Tax (21.5) (28.6) Other 0.0 1.0 Operating and Investing Cash Flow Pre-IFRS16 5.3 (25.2) Profit Before Tax Difference (5.9) (9.4) Interest Difference 27.0
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