B&m European Value Retail Plc · LSE:BME
B&m European Value Retail — FY2021 Earnings Presentation
36 slides from B&m European Value Retail's earnings presentation, Mar 27, 2021
Slide 1: FY21 Preliminary Results Presentation
B&M European Value Retail S.A. FY21 Preliminary Results Presentation 52 weeks to 27 March 2021
Slide 2: Highlights from an exceptional FY21
Highlights from an exceptional FY21 • Group revenues increased by +25.9% to £4,801.4m • B&M UK LFL revenues +23.8%, with Q4 the strongest quarter at +29.0% • 43 gross new B&M UK store openings with 18 closures, a net increase of 25 • 17 gross new store openings at Heron Foods and 4 closures, a net i
Slide 3: Alex Russo, Chief Financial Officer
Alex Russo Chief Financial Officer Ref: 750493 3
Slide 4: Summary Profit and Loss
Summary Profit and Loss £ millions, FY21 FY20 YoY change Group Stores (number) 1,091 1,050 3.9% Revenue 4,801.4 3,813.4 25.9% Gross Profit 1,763.5 1,289.2 36.8% % 36.7% 33.8% 292 bps Operating Costs (1,137.1) (946.9) 20.1% Adjusted EBITDA 626.4 342.3 83.0% Pre-IFRS16 % 13.0% 9.0% 407 bps Depreciatio
Slide 5: Performance by Fascia
Performance by Fascia FY21 FY20 YoY change HIGHLIGHTS Group Stores (number) 1,091 1,050 3.9% B&M UK 681 656 3.8% • Continued space growth despite initial disruption to Heron Foods 306 293 4.4% Babou 104 101 3.0% the construction industry caused by Covid-19 Group Revenue (£m) 4,801.4 3,813.4 25.9% •
Slide 6: Group Revenue Bridge
Group Revenue Bridge REVENUE FY20 - FY21 £ millions, Net New Stores £219m • Total Group revenue growth of +25.9% 25 26 4,801 20 94 15 • B&M UK revenue growth +29.9%, with LFL +23.8% 110 699 • New store programme delivered +£219m, with 25 net new stores in FY21 plus annualisation of FY20 openings • H
Slide 7: EBITDA Growth Across All Fascias
EBITDA Growth Across All Fascias ADJUSTED EBITDA BRIDGE FY20 - FY21 £ millions, Group 9.0% Group EBITDA margin expansion 13.0% Margin % of +407 bps driven by higher B&M UK gross margin (+292 bps) and Fascia 10.2% operational leverage (+115 bps) 14.5% Margin % 9 21 19 14 626 254 (32) (1) 342 FY20 B&M
Slide 8: B&M UK Fascia LFL Sales
B&M UK Fascia LFL Sales FY21 LFL SALES COMMENTARY • LFL revenue growth of +23.8% consistently strong H1 H2 +23.0% +24.5% throughout the year • Out of Town locations, particularly those with Garden Centres, have outperformed Town Centre locations 29.0% 26.9% • Out of Town represents c.80% of revenues
Slide 9: Group Gross Margin
Group Gross Margin GROUP GROSS MARGIN (%) KEY HIGHLIGHTS • B&M UK fascia gross margin 333 bps higher than FY20 +292 bps 36.7% • Mix shift towards Non-Grocery due to popularity of ranges such as Homewares, DIY and Gardening • Strong sell-through on Seasonal meant very limited markdown activity, which
Slide 10: Operating Costs by Fascia
Operating Costs by Fascia KEY HIGHLIGHTS £ millions, FY21 FY20 YoY change • B&M UK fascia operating costs 98 bps lower than last B&M UK 913.8 734.4 24.4% year as a percentage of revenues Heron Foods 105.9 97.7 8.4% Babou 117.4 114.8 2.3% • Voluntarily waived business rates relief of c.£75m Adjusted
Slide 11: Group Interest Expense
Group Interest Expense KEY HIGHLIGHTS • Cash interest and amortised fees relate to third party £ millions, FY21 FY20 YoY change bank debt and High Yield Bond Cash Interest Expense 22.5 22.7 (1.2)% Amortised Fees 1.7 2.1 (19.8)% • Exceptional interest charges of £4.5m relates to Interest Income (0.3)
Slide 12: Operating Cash Flow (Pre-IFRS16)
Operating Cash Flow (Pre-IFRS16) CASH FLOW STATEMENT DIVIDEND PAYOUT £ millions, FY21 FY20 70 Adjusted EBITDA (pre-IFRS16) 626.4 342.3 Special Dividend Special Dividend ∑ = £623m Change in Working Capital 123.3 99.7 60 Ordinary Dividend 1 New Store Capex (42.9) (42.4) January 20.0 50 2021 (£200m) In
Slide 13: Track Record Since IPO
Track Record Since IPO REVENUE AND STORE NUMBERS1 ADJUSTED EBITDA1,2 5 700 ADJUSTED EBITDA (£M) 4.8 600 4 626 REVENUE (£BN) 3.8 500 3 3.3 400 2.8 2 300 342 2.3 320 1.9 200 273 1 223 841 100 181 499 537 997 1050 1091 0 0 FY16 FY17 FY18 FY19 FY20 FY21 FY16 FY17 FY18 FY19 FY20 FY21 ADJUSTED EBITDA MARG
Slide 14: Simon Arora, Chief Executive Officer
Simon Arora Chief Executive Officer Ref: 750493 14
Slide 15: Our Covid-19 response for all stakeholders
Our Covid-19 response for all stakeholders • Played a crucial role in helping customers navigate the Covid-19 pandemic by making everyday essentials accessible and affordable CUSTOMERS • Focus on competitive pricing, attractive ranges and in-store execution has enabled us to Customers welcome new cu
Slide 16: ATV remained elevated throughout FY21, whilst footfall gradually recovered
ATV remained elevated throughout FY21, whilst footfall gradually recovered AVERAGE TRANSACTION VALUE AND TRANSACTION NUMBERS LFL 100% 80% 60% 40% 20% 0% Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 -20% -40% Average Transaction Value LFL Transaction Numbers LFL
Slide 17: Broad based LFL growth across categories
Broad based LFL growth across categories FY21 CATEGORY LFL SALES % FY21 CATEGORY LFL MARGIN % A A B B C C Top performing D D categories were in Non-Grocery, with a E E higher gross margin F F G G FY21 LFL H FY21 LFL H Cash Margin Sales +23.8% I I +32.3% J J K K L L M Non-Grocery M Non-Grocery Grocer
Slide 18: Update on New Customer Retention
Update on New Customer Retention JUNE 2020 NEW CUSTOMER COHORT KEY HIGHLIGHTS 80% • In June 2020, 23% of customers had not 71% shopped with B&M in the previous 5 70% 4.2x months Proportion of June 2020 new customers Average Transaction 60% Frequency of returning customers* • Over the subsequent 9 mo
Slide 19: Case Study: Homewares
Case Study: Homewares ASPIRATIONAL RANGES COMMENTARY • Increasingly appealing to middle-income households, who are likely to spend more time working from home • Turned a necessity into a business strength in FY21 • Foreign travel not possible, therefore usual visits to trade fairs and factories did
Slide 20: Case Study: Seasonal
Case Study: Seasonal GARDENING & OUTDOOR FURNITURE COMMENTARY • Around 20% of a typical store is dedicated to Seasonal, and regularly re-merchandised throughout the year • Spring/Summer 2020 season exceptionally strong for Gardening and Outdoor Furniture • Leading brand names in Gardening such as Ho
Slide 21: B&M UK Store Rollout
B&M UK Store Rollout FY21 OPENINGS 681 STORES AT MARCH 2021 • 43 gross new openings heavily H2 weighted • Evenly spread across the UK • 5 relocations and 13 legacy store closures • Expect 45 gross new stores in FY22 UK store target remains at least 950 stores New Relocation Source: Barclays European
Slide 22: Recent New Store Cohorts Performing Well
Recent New Store Cohorts Performing Well FY21 STORE CONTRIBUTION % COMMENTARY 25% 23.8% • The cohort of stores opened in FY20 continue to 20.9% 21.7% outperform the company average 20% • New stores opened in FY21 performed particularly strongly 15% • New stores do not need a ‘maturity curve’ and hav
Slide 23: Case Study: B&M succeeds in affluent areas
Case Study: B&M succeeds in affluent areas NEW STORE OPENED OCTOBER 2020 SOCIO-ECONOMIC PROFILE (2019) This store UK national location average Unemployment 1.3% 3.3% Social Housing 4.4% 9.4% Socio-grade A&B 30.0% 23.0% PROJECTED FY22 PERFORMANCE Net sales £9.0m • c.40,000 sq ft B&M Homestores with G
Slide 24: Social Media Update
Social Media Update INSTAGRAM FOLLOWERS AT MARCH 2021 STRONG BRAND ENGAGEMENT 1,319 Also have >1.1m users of the B&M App 659 000’s 520 456 303 282 265 B&M Tesco ASDA Sainsbury's Morrisons ALDI LIDL Ref: 750493 24
Slide 25: Heron Foods Update
Heron Foods Update HIGHLIGHTS • Heron Foods was acquired on 2 August 2017 at an Enterprise Value of £152m • Performance held back by Town Centre and Shopping Mall locations during lockdowns • Stable gross margin and a solid EBITDA outturn of £24.6m • 13 net new stores opened in FY21, with the progra
Slide 26: Babou Update
Babou Update HIGHLIGHTS • Ended FY21 with a total of 104 stores, of which 73 are now under the ‘B&M’ banner • Priority is to re-brand entire estate ‘B&M’ by end of 2021, therefore new store rollout in FY22 will be limited to 3 - 5 new stores • Adjusted EBITDA of £11.1m, despite the disruption caused
Slide 27: Babou B&M Conversions
Babou B&M Conversions BEFORE - BABOU AFTER - B&M EXTERNAL FASCIA Racetrack layout Traditional supermarket aisles INTERNAL STORE LAYOUT Ref: 750493 27
Slide 28: Capital Structure
Capital Structure CONSISTENT CAPITAL ALLOCATION FRAMEWORK APPROACH IN FY21 • £42.9m Capex invested in 65 gross new stores INVESTMENT IN ORGANIC GROWTH during FY21 • Ordinary dividends increased by 113.6% to 17.3p per share for the full year ORDINARY DIVIDEND • Not currently evaluating any further ac
Slide 29: A purpose-driven approach to ESG
A purpose-driven approach to ESG OUR PURPOSE: TO DELIVER GREAT VALUE TO OUR CUSTOMERS SO THAT THEY KEEP RETURNING TO OUR STORES TIME AND TIME AGAIN ESG pillar Colleagues Communities Customers Suppliers Environment Diversity & equality Being a positive Helping families Treated as partners Implementin
Slide 30: ESG Highlights for FY21
ESG Highlights for FY21 Colleagues Communities Customers Suppliers Environment 110% >7,200 Value <26 99.8% Wages paid to UK jobs Across a range of B&M UK trade Group packaging frontline colleagues created everyday essentials creditor days waste recycled in Apr-20 Extra week £4.9m 71% Consistent (24)
Slide 31: Current Trading and FY22 Outlook
Current Trading and FY22 Outlook • B&M UK LFL sales growth over the first 9 weeks of FY22 has been -1% vs FY21 • This includes a pull-forward of Summer 2021 Gardening demand • As expected, trading has been volatile at a weekly and product category level, in particular since the recent easing of lock
Slide 32: Summary
Summary • We have acted in the interests of all stakeholders throughout FY21, responding well and delivering a exceptional financial performance across the Group • Our business model has proved resilient and our proposition has been highly relevant to the needs of customers during the pandemic • Our
Slide 33: Questions and Answers
Questions and Answers Ref: 750493 33
Slide 34: Appendices
Appendices Ref: 750493 34
Slide 35: IFRS16 Profit and Loss Account Reconciliation
IFRS16 Profit and Loss Account Reconciliation Appendix 1 FY21 FY20 Pre- IFRS16 Post- Pre- IFRS16 Post- £ millions, IFRS16 Adjustments IFRS16 IFRS16 Adjustments IFRS16 Revenues 4,801.4 - 4,801.4 3,813.4 - 3,813.4 Gross Profit 1,763.5 - 1,763.5 1,289.2 - 1,289.2 Operating Costs (1,137.1) 207.5 (929.6)
Slide 36: Barclaycard Customer Types
Barclaycard Customer Types Appendix 2 BARCLAYCARD SEGMENT THE UK SHOPPER POPULATION INTO 10 CUSTOMER TYPES Source: Barclaycard Market & B&M Customer Insights Report, August 2020 Ref: 750493 36
B&M European Value Retail — FY2021 Earnings Presentation on 6ix