B&m European Value Retail Plc · LSE:BME
B&m European Value Retail — H1 FY22 Earnings Presentation
35 slides from B&m European Value Retail's earnings presentation, November 2021
Slide 1: FY22 Interim Results Presentation
B&M European Value Retail S.A FY22 Interim Results Presentation 26 weeks to 25 September 2021
Slide 2: H1 FY22 Group Highlights
H1 FY22 Group Highlights • Group revenues increased by +1.2% year-on-year to £2,268.0m, or +26.8% on a 2-year basis ➢ B&M UK LFL revenues in H1 -5.0% vs FY21, but +16.8% on a 2-year basis vs pre-pandemic levels of FY20 ➢ 14 gross new B&M UK store openings with 9 closures, a net increase of 5 ➢ 8 gro
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, H1 FY22 H1 FY211 YoY Change H1 FY20 2YoY Change Group Stores (number) 1,097 1,059 3.6% 1,034 5.2% Revenue 2,268.0 2,242.1 1.2% 1,788.7 26.8% Gross Profit 848.1 801.5 5.8% 613.7 38.2% % 37.4% 35.7% 164 bps 34.3% 308 bps Operating Costs (565.9) (505.9) 11.9% (462.3)
Slide 5: Performance by Fascia
Performance by Fascia H1 H1 YoY H1 2YoY FY22 FY211 change FY20 change HIGHLIGHTS Group Stores (number) 1,097 1,059 3.6% 1,034 6.1% B&M UK 686 657 4.4% 645 6.4% • Strong 2-year LFL sales growth in B&M UK, with sales Heron Foods 307 299 2.7% 290 5.9% densities significantly higher than pre-pandemic le
Slide 6: Strong Growth vs Pre-Pandemic Levels
Strong Growth vs Pre-Pandemic Levels H1 GROUP REVENUE (£M) H1 GROUP ADJUSTED EBITDA (£M) AND MARGIN1 3,000 300 296 £256m if adjusted for 282 +27% business rates relief1 2,500 2-year 250 growth +86% 2,242 2,268 2-year 2,000 200 growth 1,789 1,500 150 151 1,000 100 500 50 8.5% 13.2% 12.4% 0 0 H1 FY20
Slide 7: Group Revenue Bridge
Group Revenue Bridge H1 REVENUE FY21-FY22 £ millions, • Total Group revenue growth of +1.2% Net New Stores +£113m 15 2,268 • B&M UK revenue growth of +1.3% overall 103 16 4 2,242 (6) (13) • New store programme delivered +£113m, offsetting the -5.0% LFL decline B&M UK • Wholesale revenue increase of
Slide 8: Group adjusted EBITDA bridge
Group adjusted EBITDA bridge ADJUSTED EBITDA BRIDGE H1 FY21-FY22 £ millions, Group Margin % 13.3% 12.4% B&M Fascia 14.7% 13.5% Margin % 296 1 13 2 9 282 (13) (21) B&M UK (5) fascia only H1 FY21 LFL FY21 New FY22 New Net of relocated & Central Heron Foods France H1 FY22 closed Note: Comparative finan
Slide 9: B&M UK Fascia LFL Sales
B&M UK Fascia LFL Sales H1 FY22 SALES LFL COMMENTARY • H1 LFL revenue decline of -5.0% on a 1-year basis but H1 +16.8% vs FY20 +16.8% on a 2-year basis vs FY20 -5.0% vs FY21 • Increase in sales densities suggests that many new customers acquired during FY21 have been retained 26.9% 21.3% • Average T
Slide 10: Group Gross Margin
Group Gross Margin GROUP GROSS MARGIN (%) KEY HIGHLIGHTS Gross margin expansion driven by combination of sales mix shift towards General Merchandise • B&M UK fascia gross margin 153 bps higher than last year and unusually low markdown activity • Sales participation from General Merchandise has +308
Slide 11: Operating Costs by Fascia
Operating Costs by Fascia H1 H1 YoY H1 2YoY KEY HIGHLIGHTS £ millions, FY22 FY211 change FY20 change B&M UK 454.8 399.7 13.8% 358.0 27.0% • In the core B&M UK fascia, on a 2-year basis vs H1 FY20 operating costs are 76 bps lower due to operating leverage on Heron Foods 51.3 49.9 2.7% 47.1 8.8% highe
Slide 12: Group Interest Expense
Group Interest Expense KEY HIGHLIGHTS • Cash interest and amortised fees relate to third party bank £ millions, H1 FY22 H1 FY21 YoY change debt and High Yield Bond Cash Interest Expense 11.3 11.1 2.3% Amortised Fees 0.8 0.8 (1.2)% • Group retains strong liquidity following re-financing in July Inter
Slide 13: Cash Flow Generation Remains Strong
Cash Flow Generation Remains Strong OPERATING CASH FLOW £m COMMENTARY • Working capital outflow of £170.9m driven by the decision H1 FY22 H1 FY21 to import Golden Quarter inventory early and unusually Adjusted EBITDA (pre-IFRS16) 282.2 295.6 low stock cover in prior year comparative Change in Workin
Slide 14: Simon Arora, Chief Executive Officer
Simon Arora Chief Executive Officer Ref: 750493 14
Slide 15: B&M UK LFL Sales Remain Significantly Above Pre-Pandemic Levels
B&M UK LFL Sales Remain Significantly Above Pre-Pandemic Levels B&M UK 2-YEAR LFL REVENUE (£M)1 COMMENTARY 2,500 • Financial year began on 28 March 2021, with all non- +16.8% essential retail open since 12 April 2021 (week 3 of the 26 2,000 2-year LFL growth week period) 1,860 • 2-year LFL sales per
Slide 16: Relatively Consistent Monthly 2-Year LFL Performance
Relatively Consistent Monthly 2-Year LFL Performance B&M UK 2-YEAR LFL BY MONTH 35% April was boosted by exceptional demand 30% for Gardening 25% 2-year LFL 20% 15% 10% 5% 0% Apr May Jun Jul Aug Sep Ref: 750493 16
Slide 17: Footfall Has Remained Subdued But ATV Significantly Above Historical Levels
Footfall Has Remained Subdued But ATV Significantly Above Historical Levels 2-YEAR LFL AVERAGE TRANSACTION VALUE AND TRANSACTION NUMBERS H1 FY22 2-YEAR SALES LFL +16.8% 35% H1 FY22 30% 2-year LFL 25% ATV 20% +24.6% 15% 10% 5% 0% Apr May Jun Jul Aug Sept Footfall -5% -6.2% -10% -15% Average Transacti
Slide 18: Well Positioned to Navigate Macro Headwinds
Well Positioned to Navigate Macro Headwinds SUPPLY CHAIN DISRUPTION INFLATION PASS-THROUGH • Direct sourcing model and strong supplier relationships • Well placed to maintain our disruptive price positioning make us more agile and responsive than competitors • So far, we are not seeing any signs of
Slide 19: Broad Based 2-year LFL Growth Across Categories
Broad Based 2-year LFL Growth Across Categories 2-YEAR LFL SALES BY CATEGORY 2-YEAR LFL MARGIN BY CATEGORY A A B B C C D D E E F F H1 FY22 H1 FY22 Non-Grocery 2-YEAR LFL 2-YEAR LFL G G Grocery Cash Margin Sales +16.8% H H +24.1% I I J J K K L L M M Planned reduction in space N allocated to Clothing
Slide 20: Grocery Performance Remains Pleasing
Grocery Performance Remains Pleasing HIGHLIGHTS • We have maintained our price gap vs competitors • Basket of Grocery SKUs monitored fortnightly • Expect to see a higher level of inflation in H2 than that seen in H1, but competitors to behave rationally • Continued development of relationships with
Slide 21: Strong Operational Execution Across General Merchandise
Strong Operational Execution Across General Merchandise HIGHLIGHTS • Continued success of on-trend and aspirational product ranges supported by in-store colour-blocking and “shop the look” approach to visual merchandising • Category performance suggests many new customers from FY21 are continuing to
Slide 22: B&M Has a High Frequency of Visit versus General Merchandise Competitors
B&M Has a High Frequency of Visit versus General Merchandise Competitors AVERAGE ANNUAL FREQUENCY OF IN-STORE PURCHASES BASED ON BRANDVUE CUSTOMER RESPONSES 12 11.2 10.1 10 9.7 Annual shopping frequency (In Store) 8 7.1 6 5.0 4.6 4.1 4 3.0 2 0 Discounter 1 Discounter 2 B&M Discounter 3 Category Cate
Slide 23: B&M UK Store Rollout Continues
B&M UK Store Rollout Continues H1 FY22 OPENINGS 686 STORES AT SEPTEMBER 2021 • 14 gross new openings in H1 FY22 KW Key: Each postcode area is coloured in one of six shades depending on the number of B&M stores per 100,000 people in that particular postcode area. IV • 2 relocations and 7 closures HS
Slide 24: Recent New Store Cohorts Performing Well
Recent New Store Cohorts Performing Well H1 FY22 STORE CONTRIBUTION % COMMENTARY 22.5% • We target a sales area of c.20,000 sq. ft; ideally Out 22.0% 21.9% of Town with convenient parking and space for a 21.7% 21.5% Garden Centre 21.0% 21.0% 20.9% • In H1 FY22, the cohort of stores opened since the
Slide 25: Ongoing Portfolio Optimisation Delivers Accretive Returns
Ongoing Portfolio Optimisation Delivers Accretive Returns PROFILE OF RECENT STORE CLOSURES COMMENTARY FY18 FY19 FY20 FY21 H1 FY22 • The B&M fascia new store programme is offset by a small Relocations (5) (5) (8) (5) (2) Closures (3) (5) (7) (13) (7) number of relocations and closures: Average age of
Slide 26: Highly Engaging and Successful Social Media Presence
Highly Engaging and Successful Social Media Prescence INSTAGRAM FOLLOWERS AT SEPTEMBER 2021 ENGAGED ONLINE COMMUNITY 1381 +22% growth over last 12 months 000’s 691 538 474 312 296 274 B&M Tesco ASDA Sainsbury's Morrisons ALDI LIDL Ref: 750493 26
Slide 27: Heron Foods Performance Remains Satisfactory
Heron Foods Performance Remains Satisfactory HIGHLIGHTS • Delivered a satisfactory performance against the very strong comparatives of H1 FY21 in the context of average transaction value normalising • Footfall is normalising in Neighbourhood locations, but recovering more gradually in Town Centre an
Slide 28: Continued Progress in France
Continued Progress in France 2-YEAR SALES PERFORMANCE THREE STRATEGIC PRIORITIES FUTURE PLANS • Performance in H1 FY21 was severely 1) Product range evolution well • Team is focused on delivering a impacted by lockdown restrictions, advanced, with Clothing and successful Golden Quarter, and targetin
Slide 29: Homeware ranges in France have been well received
Homeware ranges in France have been well received • There is an annual online survey among shoppers for the “2022 Best Store Chain in France” • More than 655,000 people voted for different categories and an overall winner • Lidl won the “Best Supermarket Store” • Ikea won the “Best Furniture Retaile
Slide 30: Clear and Consistent Capital Allocation Policy
Clear and Consistent Capital Allocation Policy CAPITAL ALLOCATION FRAMEWORK CURRENT APPROACH • UK and France store rollout continues to be funded INVESTMENT IN ORGANIC GROWTH through strong cash generation • Ordinary half year dividend increased by 16.3% to ORDINARY DIVIDEND 5.0p per share • Not cur
Slide 31: Ongoing Progress on ESG
Ongoing Progress on ESG OUR ESG PILLARS REMAIN COLLEAGUES, COMMUNITIES, CUSTOMERS, SUPPLIERS AND THE ENVIRONMENT HIGHLIGHTS FROM H1 FY22 PRIORITIES FOR H2 FY22 • Societal value in helping customers navigate the • Continue to evaluate metrics and targets economic impact of the pandemic through our ap
Slide 32: Q3 Trading and Outlook for H2 FY22
Q3 Trading and Outlook for H2 FY22 • Well positioned for Golden Quarter, with good stock availability despite widely reported shipping disruption from Asia • In the first six weeks of Q3, B&M UK LFL sales have been +14.7% on a 2-year basis • Represents -8.9% vs H1 FY21, but this is heavily skewed by
Slide 33: Questions and Answers
Questions and Answers Ref: 750493 33
Slide 34: Appendix
Appendix Ref: 750493 34
Slide 35: H1 FY22 IFRS16 Reconciliation
H1 FY22 IFRS16 Reconciliation Appendix 1 Pre- Post- £ millions, IFRS16 Change IFRS16 Notes Revenues 2,268.0 - 2,268.0 No change Gross Profit 848.1 - 848.1 No change Operating Costs (565.9) 103.1 (462.8) Operating lease rental cost is removed Adjusted EBITDA 282.2 103.1 385.3 Adjusted EBITDA increase
B&M European Value Retail — H1 FY22 Earnings Presentation on 6ix