B&m European Value Retail Plc · LSE:BME
B&m European Value Retail — FY2019 Earnings Presentation
33 slides from B&m European Value Retail's earnings presentation, May 2019
Slide 1: Preliminary Results Presentation, 52 weeks to 31st March 2019
B&M European Value Retail Preliminary Results Presentation 52 weeks to 31st March 2019
Slide 2: FY19 Group Highlights
FY19 Group Highlights • Group revenues increased by 17.1% to £3,486.3m B&M UK LFL revenues +0.7% with a strong finish, Q4 LFL +5.8% 54 gross new B&M store openings in the UK and a net 44 20 gross new store openings at Heron and a net 16 10 new store openings at Jawoll and £129.1m revenues fr
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, March year end FY18A1 FY19A % FY18A (53 Weeks) £ millions, Group Stores 927 1,093 17.9% 927 Revenues 2,976.3 3,486.3 17.1% 3,029.8 Gross Profit 1,010.2 1,189.4 17.7% 1,028.4 % 33.9% 34.1% 18bps 33.9% Operating Costs (731.2) (877.1) 20.0% (745.1) Adjusted EBITDA 27
Slide 5: Group Revenue Bridge
Group Revenue Bridge REVENUE FY18-FY19 £ millions, • +17.1% overall Group revenue growth • B&M UK growth + 8.7% 129 3,486 • Annualisation of FY18 new store openings 144 Net New Stores £182m • 54 gross new stores opened in the UK including 5 relocations. Closed 5 stores. 13 30 12 • UK LFL +0.7% 99 (5
Slide 6: Continued UK EBITDA Growth
Continued UK EBITDA Growth £ millions, ADJUSTED EBITDA BRIDGE FY18-FY19 Group Margin % 9.4% 9.0% B&M Fascia 10.2% 10.6% +45bps Margin % 14.7 5.6 312.3 (3.7) 8.2 13.2 0.3 (15.8) 10.9 279.0 Relocation Jawoll LFL Heron Babou Central 2018A 2019A FY18 New FY19 New /Closed Net Ref: 750493 Note: 1. FY18 re
Slide 7: B&M Fascia LFL Sales
B&M Fascia LFL Sales FY19 STRONG Q4 COMMENTARY • Full year LFL sales growth of +0.7% H1 +0.0% H2 +1.4% • Strong Q4 +5.8% LFL and +6.7% excluding Easter impact • There has been growth in both customer numbers and 7.7% 7.3% average transaction values 5.8% 3.9% • Retail price inflation continues to eas
Slide 8: Group Gross Margin Performance
Group Gross Margin Performance GROUP GROSS MARGIN (%) KEY HIGHLIGHTS • B&M fascia margins were 29bps higher than last year • Despite headwind of further shift in the mix towards 33.9% 34.1% grocery / FMCG ranges • Despite impact of wholesale margin on c. £12m sales • Offset by good sell through on s
Slide 9: Group Operating Costs
Group Operating Costs £ millions, KEY HIGHLIGHTS • B&M fascia operating costs as a % of sales are 16bps lower FY18 FY19 than last year B&M 608.5 657.0 Heron 55.5 91.6 • impact of living wage mitigated through productivity Jawoll 67.1 79.4 gains Babou - 49.1 Total Group 731.2 877.1 • Some worsening i
Slide 10: Group Interest Expenses
Group Interest Expenses £ millions, KEY HIGHLIGHTS FY18 FY19 • Interest and amortised fees relate to the bank debt and Interest 20.1 21.0 bonds Amortised Fees 1.5 1.9 Total 21.6 22.9 • We expect full year Interest charge in FY20 of c. £23m including fee amortisation following the additional loan Put
Slide 11: Continued Cash Flow Conversion
Continued Cash Flow Conversion £ millions, OPERATING CASH FLOW CASH FLOW STATEMENT 260 £m FY18A FY19A 243 Adjusted EBITDA 283.3 312.3 Change in Working Capital (40.2) (52.5) New Store Capex (33.7) (40.0) 154 129 Infrastructure Capex (62.4) (30.8) Maintenance Capex (18.0) (34.9) Capex (114.1) (105.7)
Slide 12: Simon Arora, Chief Executive Officer
Simon Arora Chief Executive Officer Ref: 750493 12
Slide 13: Jawoll Germany
Jawoll Germany P&L, £M TRADING SUMMARY • Delivered Total Revenue Growth of 6.7%, with LFL +2.6% FY18 FY19 Revenues 200.3 213.7 • Gross Margin reduced by 392 bps • clearance activity of slow-selling product, especially in Gross Profit 72.7 69.2 structurally challenged clothing category % 36.3% 32.4%
Slide 14: Jawoll: Category performance highly mixed
Jawoll: Category performance highly mixed CATEGORY PERFORMANCE COMMENTARY A • Grocery & FMCG delivered -0.7% LFL B • Gardening delivered +6.1% LFL C • Toys delivered +57.6% D E • Clothing experienced -21.3% LFL and at extremely low F margin G • Christmas Decorations underperformed, due to understock
Slide 15: Jawoll: Outlook for FY20
Jawoll: Outlook for FY20 PRODUCT RANGE • Build on initial success of B&M sourced ranges but learn from customer reaction on a line-by-line basis • Repeat order to known Rates of Sale and not “Too Little” or “Too Much” which characterised first seasons • Clear out remaining stocks that are over 1 yea
Slide 16: BABOU: At a glance
BABOU: At a glance HIGHLIGHTS • 100% of Babou was acquired October 2018 for €94m • Babou trades from 96 out of town retail stores with average 2,700m² sales area • Stores are generally well located and of consistent size • In 2017, Babou delivered revenues €347m and underlying EBITDA of €17m • Distr
Slide 17: Accelerated change in product ranges
Accelerated change in product ranges CASE STUDY: B&M INDOOR FURNITURE LAUNCHED MARCH 2019 COMMENTARY • In the weeks following launch of the B&M range, the department’s weekly sales tripled • We have similar launches across Home, Toys, Pet, Stationery & Christmas over H1 of FY20 • FMCG and Ambient fo
Slide 18: Core UK Market: Spending is Subdued
Core UK Market: Spending is Subdued YOY PERCENTAGE CHANGE IN FOOTFALL INDICES 4.0 2.0 0.0 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 -2.0 High Street Out of Town -4.0 Shopping Centre -6.0 -8.0 -10.0 BRC LFL SALES TOTAL BY MONTH (12 MONTHS TO MAR-19) 8.00 6.00 4.00 FY17 2.00 FY18 0.00 FY19 Apr
Slide 19: Shoppers want to save money
Shoppers want to save money How do you think your grocery shopping habits will change over the next 12 months? Source: PwC Consumer Sentiment Survey December 2018 (n = 2,053) Ref: 750493 19
Slide 20: UK Revenue Growth
UK Revenue Growth 25% Last Reported % Revenue Increase 15% 5% -5% Note: 1. Latest annual accounts or full year announcements, up to May 2019. Revenues exclude VAT Note 2. B&M figures include Heron Foods and are stated on a 52 week basis. Note 3. Lidl do not separately disclose UK revenues Ref: 75049
Slide 21: B&M's LFL Performance by category
B&M’s LFL Performance by category FULL YEAR CATEGORY LFL SALES % FULL YEAR CATEGORY LFL MARGIN % E E H H F F G G J J A A B B D FY 19 LFL D FY 19 LFL Cash Sales +0.7% Margin +2.0% C C M M K K L L O O N N I I (20.00%) (15.00%) (10.00%) (5.00%) 0.00% 5.00% 10.00% 15.00% 20.00% (15.00%) (10.00%) (5.00%)
Slide 22: Case Study: Toy Department
Case Study: Toy Department GROSS TOY SALES COMMENTARY • UK Toy market estimated to be £3.3bn in 2018, of which 34% is online(1), £217m meaning B&M now enjoys c. 7% total market share and c. 10% of bricks and mortar sales. £192m £175m • Our increasing size and improved retail standards have encourage
Slide 23: Case Study: Home Department
Case Study: Home Department COMMENTARY • Homeware categories underperformed in FY19 • We invested new buying and design resources into the category • March 2019 saw launch of new ranges and implementation of new visual merchandising principles • Q3 YTD LFL Performance: -9.2% • Q4 LFL Performance: -1
Slide 24: New Store Programme
New Store Programme FY19 OPENINGS 620 STORES AS AT MARCH 2019 • 54 gross openings (net 44 stores due to 5 relocations and 5 store closures) • Consistent high store returns • Healthy pipeline for FY20 of 45 net new stores and promising pipeline for FY21 FY19 New Stores Relocations 1.5 to 2.0 1.0 to 1
Slide 25: Postcode Analysis suggests upside on In-fill opportunity
Postcode Analysis suggests upside on In-fill opportunity KW Key: Each postcode area is coloured in one of six shades depending on COMMENTARY the number of B&M stores per 100,000 people in that particular postcode area. IV HS AB • We re-affirm 950 store target but there is clearly PH 0.0-0.5 0.5-1.0
Slide 26: Case Study: Stoke-on-Trent, Staffordshire
Case Study: Stoke-on-Trent, Staffordshire CASE STUDY: STOKE-ON-TRENT COMMENTARY • Our first Stoke store is over 15 years old. • We have opened 4 further stores within a 3 mile radius of the first store, most recently Wolstanton, which is only 1 mile away, on 26/04/19. • Our budget for these 5 stores
Slide 27: Marketing Update
Marketing Update INSTAGRAM EXAMPLE CAMPAIGN B&M APP Followers May-19: 442k • ‘Mission Christmas’ collects and distributes toys and gifts to Followers May-18: 185k underprivileged children across the • App launched Jan-18 UK. B&M is a key sponsor and our stores act as collection points • Actively use
Slide 28: Heron Foods Update
Heron Foods Update HIGHLIGHTS • The Heron acquisition continues to prove successful and integration has gone well • Positive LFL performance in FY19 driven by B&M ambient food ranges • Opened 20 gross (16 net) new stores in FY20 and plans to open 20 in FY20 • Further roll-out of Heron’s Frozen/Chill
Slide 29: New Warehouse Investment in the UK
New Warehouse Investment in the UK IMPRESSION OF PROPOSED NEW DC FOR THE SOUTH KEY HIGHLIGHTS • Acquired land in FY18 in Bedford at a cost of £44m, to develop a purpose built 1 million sq. ft. distribution centre for South of UK • Build costs incurred over FY19 has been £21m • We propose to ‘Sale an
Slide 30: Capital Structure
Capital Structure DE-LEVERAGING PROFILE CAPITAL ALLOCATION FRAMEWORK STORE ROLLOUT 1 3.10 1.75x exc. Warehouse Investment 2.19 1.92 1.99 1.84 ORDINARY DIVIDEND 1.71 M&A OPPORTUNITY FY14A FY15A FY16A FY17A FY18A FY19A We are not currently evaluating any RETURN SURPLUS CASH TO SHAREHOLDERS further acq
Slide 31: Outlook for FY20
Outlook for FY20 • B&M model is highly relevant and continues to win market share in UK • Our strong LFL’s of +5.8% in FY19 Q4 have continued into FY20, albeit only 6 weeks trade so far. We are delighted by our best ever Easter trading period, but prudent to expect more modest LFL growth in the full
Slide 32: Appendix
Appendix Ref: 750493 32
Slide 33: IFRS16 – Estimated Impact
IFRS16 – Estimated Impact KEY HIGHLIGHTS P&L ESTIMATED IMPACT £m • We are adopting IFRS16 for FY20 • The indicative impact in FY19 would have been as follows: • Significant change on the financial statements, but no FY19 IFRS16 FY19 Pro- impact upon Group cash flows or how we manage our Reported Adj
B&M European Value Retail — FY2019 Earnings Presentation on 6ix