B&m European Value Retail Plc · LSE:BME
B&m European Value Retail — H1 FY21 Earnings Presentation
30 slides from B&m European Value Retail's earnings presentation, Nov 26, 2020
Slide 1: FY21 Interim Results Presentation
B&M European Value Retail FY21 Interim Results Presentation 26 weeks to 26 September 2020
Slide 2: H1 FY21 Group Highlights
H1 FY21 Group Highlights • Group revenues increased by +25.3% to £2,242.1m B&M UK LFL revenues were +23.0% with Q1 +26.9% and Q2 +19.1% 9 gross new B&M UK store openings and 8 closures, a net increase of 1 7 gross new store openings at Heron, net 6 openings 4 new stores opened in France with
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, H1 FY201 H1 FY21 % Change Group Stores 1,034 1,059 2.4% Revenue 1,788.7 2,242.1 25.3% Gross Profit 613.7 801.5 30.6% % 34.3% 35.7% 144 bps Operating Costs (462.3) (505.9) 9.4% Adjusted EBITDA 151.4 295.6 95.3% Pre-IFRS16 % 8.5% 13.3% 484 bps Depreciation and Amort
Slide 5: Group Revenue Bridge
Group Revenue Bridge H1 REVENUE FY20-FY21 £ millions, Net New Stores £108m • Total Group revenue growth of +25.3% 28 2,242 10 9 89 9 (4) • B&M UK revenue growth +29.5%, with LFL +23.0% 312 • New store programme delivered +£108m • Wholesale revenue increase of +£9m • Heron revenue growth +14.8% 1,789
Slide 6: Continued UK EBITDA Growth
Continued UK EBITDA Growth ADJUSTED EBITDA BRIDGE H1 FY20-FY21 £ millions, Group 8.5% EBITDA margin growth driven by 13.3% Margin % higher participation of Non- B&M Grocery sales, strong sell-through Fascia 9.4% and operational leverage 14.7% Margin % 5 6 7 296 16 2 121 (6) (6) 151 H1 FY20 LFL FY20
Slide 7: B&M UK Fascia LFL Sales
B&M UK Fascia LFL Sales H1 FY21 SALES LFL COMMENTARY • H1 LFL revenue growth of +23.0% H1 +23.0% • Significant increase in Average Transaction Value has more than offset the reduction in transaction volumes 26.9% • Out of Town locations have outperformed Town Centre locations, but both delivered str
Slide 8: Group Gross Margin Performance
Group Gross Margin Performance GROUP GROSS MARGIN (%) KEY HIGHLIGHTS • B&M UK fascia gross margin 176 bps higher than last year • Mix shift towards Non-Grocery due to popularity of 35.7% ranges such as Homewares, DIY and Gardening 34.3% • Non-Grocery had high sell-through on Seasonal and so benefitt
Slide 9: Group Operating Costs
Group Operating Costs £ millions, KEY HIGHLIGHTS H1 FY201 H1 FY21 • B&M UK fascia operating costs 338 bps lower than last year as B&M 358.0 399.8 a percentage of revenues Heron 47.1 49.9 • Business rates relief of c.£35m for H1 substantially offset by France 57.2 56.2 incremental costs of social dis
Slide 10: Group Interest Expense
Group Interest Expense £ millions, KEY HIGHLIGHTS • Interest and amortised fees relate to third party bank debt H1 FY201 H1 FY21 and High Yield Bond Cash Interest 11.0 11.1 Amortised Fees 1.2 0.8 • £4.5m exceptional interest charge relates to unamortised Total 12.2 11.9 fees on previous facilities b
Slide 11: Cash Flows Pre-IFRS16
Cash Flows Pre-IFRS16 OPERATING CASH FLOW £m CASH FLOW STATEMENT £m H1 FY20 H1 FY21 400 Adjusted EBITDA (pre-IFRS16) 151.4 295.6 350 322 Change in Working Capital (56.9) 27.1 300 291 New Store Capex (25.1) (14.2) 250 Infrastructure / Freehold Capex (31.3) (8.3) 200 Maintenance Capex (23.8) (9.0) 150
Slide 12: Simon Arora, Chief Executive Officer
Simon Arora Chief Executive Officer Ref: 750493 12
Slide 13: Impact of Covid-19
Impact of Covid-19 RESPONSE SO FAR ONGOING UNCERTAINTIES • Classified early in crisis as an “essential retailer” by UK • Significant uncertainty surrounding both the nature and Government, given our c.£2bn p.a. of Grocery sales, over 4 duration of Covid-19 restrictions, which may impact trading mill
Slide 14: Who is the B&M Customer? (1 of 2)
Who is the B&M Customer? (1 of 2) BARCLAYCARD SEGMENT THE UK SHOPPER POPULATION INTO 10 CUSTOMER TYPES Source: Barclaycard Market & B&M Customer Insights Report, August 2020 Ref: 750493 14
Slide 15: Who is the B&M Customer? (2 of 2)
Who is the B&M Customer? (2 of 2) CUSTOMER DISTRIBUTION IN JUNE 2020 Barclaycard data indicates that 23% of B&M customers in June 2020 had not shopped with B&M in the prior 5 months Source: Barclaycard Market & B&M Customer Insights Report, August 2020 Ref: 750493 15
Slide 16: Highly elevated ATV, offset by lower transaction numbers
Highly elevated ATV, offset by lower transaction numbers AVERAGE TRANSACTION VALUE AND TRANSACTION NUMBERS LFL H1 FY21 SALES LFL +23.0% 100% 80% 60% 40% 20% 0% Apr May Jun Jul Aug Sept -20% -40% Average Transaction Value LFL -60% Transaction Numbers LFL Note: Data shown for B&M UK business only Ref:
Slide 17: Broad based LFL growth across categories
Broad based LFL growth across categories H1 FY21 CATEGORY LFL SALES % H1 FY21 CATEGORY LFL MARGIN % A A B B C C D D E E F F G G H H H1 FY21 LFL H1 FY21 LFL Cash Margin I Sales +23.0% I +28.9% J J K K L L M Non-Grocery M Non-Grocery Grocery N N Grocery Continue to reduce exposure to Clothing; now O o
Slide 18: Multi-year resilient Gross Margin
Multi-year resilient Gross Margin Outperformance driven by 45% exceptionally strong sell- 1.80 through and favourable 40% Summer weather 1.60 35.8% 34.5% 34.3% 34.6% 34.0% 34.4% 34.0% 35% 1.40 B&M UK Gross Margin 30% 25% 1.20 GBP:USD 20% 1.00 15% 0.80 10% 0.60 5% 0% 0.40 FY15 FY16 FY17 FY18 FY19 FY2
Slide 19: B&M UK Store Rollout
B&M UK Store Rollout H1 FY21 OPENINGS 657 STORES AT SEPTEMBER 2020 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 HS AB • 9 gross openings (net 1 PH 0.0-0.5 0.5-1.0 1.0-1.5 DD new store due to
Slide 20: Recent New Store Cohort Performing Well
Recent New Store Cohort Performing Well HI FY21 STORE CONTRIBUTION % COMMENTARY 25% • Over H1 FY21, the cohort of stores opened in 21.9% 21.2% FY20 slightly outperformed the company 20% average 15% • Our stores do not typically need a ‘maturity 10% curve’ 5% 0% • We target a sales area of c.20,000 s
Slide 21: Update on FY21 New Store Programme
Update on FY21 New Store Programme GROSS NEW STORE OPENINGS COMMENTARY 25 • Q1 and Q2 heavily impacted by lockdown and Covid-19 disruption on commercial property market H2 FY21 gross 20 openings will be 31 to 36, weighted to Q4 • Recent pick-up in leasing activity has boosted FY21 openings 15 • Now
Slide 22: Social Media Update
Social Media Update INSTAGRAM FOLLOWERS AT SEPTEMBER 2020 CUSTOMERS LOVE B&M 1129 +78% growth Also have >985k over last 12 downloads of months the B&M App 601 000’s 472 426 282 255 227 B&M Tesco ASDA Sainsbury's Morrisons ALDI LIDL Ref: 750493 22
Slide 23: Heron Foods Update
Heron Foods Update HIGHLIGHTS • Heron was acquired on 2 August 2017 at an Enterprise Value of £152m • LTM adjusted EBITDA of £31.5m represents EV/EBITDA ratio of 4.8x • Performance continues to be pleasing, with a positive LFL performance in H1 • Stable gross margin with an outperformance in adjuste
Slide 24: Babou France Update
Babou France Update HIGHLIGHTS • At H1 FY21 had a total of 103 stores, of which 37 were under the ‘B&M’ banner • 4 gross new stores opened over H1, with 2 stores closed • Babou generated adjusted EBITDA of £2.7m in H1, despite a cumulative EBITDA loss of £5.7m during weeks 1 to 6 when all stores wer
Slide 25: Capital Structure
Capital Structure DE-LEVERAGING PROFILE CAPITAL ALLOCATION FRAMEWORK • In the current uncertain macroeconomic outlook we are taking a prudent approach to our capital structure and UK STORE ROLLOUT AND INVEST IN BABOU returns • Net debt / adjusted EBITDA at H1 FY21 is 0.7x on a pre- IFRS16 basis, rem
Slide 26: Q3 Trading and Outlook for FY22
Q3 Trading and Outlook for FY22 • LFL sales growth in the B&M UK fascia is expected to moderate over H2, but so far in Q3 has been at a similar level to H1. • New store pipeline has improved, but openings for both the B&M UK and Heron Food businesses will be significantly back-end weighted in both Q
Slide 27: Summary
Summary • The safety of our colleagues and customers remains paramount. Our store and support centre teams have adapted well, at speed and we have created over 1,800 new jobs. We stand ready to continue serving the communities in which we trade as the health crisis continues. • Our business model ha
Slide 28: Questions and Answers
Questions and Answers Ref: 750493 28
Slide 29: Appendix
Appendix Ref: 750493 29
Slide 30: IFRS16 Profit and Loss Account Reconciliation
IFRS16 Profit and Loss Account Reconciliation Appendix 1 H1 FY20 IFRS16 H1 FY20 H1 FY21 IFRS16 H1 FY21 £ millions, Pre-IFRS16 Adjustments Post-IFRS16 Pre-IFRS16 Adjustments Post-IFRS16 Revenues 1,788.7 - 1,788.7 2,242.1 2,242.1 Gross Profit 613.7 613.7 801.5 801.5 Operating Costs (462.3) 89.8 (372.5
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