B&m European Value Retail Plc · LSE:BME
B&m European Value Retail — FY2022 Earnings Presentation
39 slides from B&m European Value Retail's earnings presentation, May 2022
Slide 1: FY22 Preliminary Results Presentation
B&M European Value Retail S.A FY22 Preliminary Results Presentation 52 weeks to 26 March 2022
Slide 2: FY22 Group Highlights
FY22 Group Highlights • Strong operational execution has consolidated the two-year growth in both sales and profit • Group revenues decreased by -2.7% year-on-year to £4,673m, but grew +22.5% on a 2-year basis • B&M UK LFL revenues -9.0% vs FY21 but +13.0% on vs pre-pandemic levels of FY20 • 34 gros
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, FY22 FY21 YoY Change FY20 2YoY Change Group Stores (number) 1,119 1,091 2.6% 1,050 6.6% Revenue 4,673 4,801 (2.7)% 3,813 22.5% Gross Profit 1,752 1,763 (0.6)% 1,289 35.9% % 37.5% 36.7% 77 bps 33.8% 369 bps Operating Costs (1,133) (1,137) (0.3)% (947) 19.7% Adjuste
Slide 5: Performance by Fascia
Performance by Fascia YoY 2YoY HIGHLIGHTS FY22 FY21 FY20 change change Group Stores (number) 1,119 1,091 2.6% 1,050 6.6% • Strong 2-year LFL sales growth in B&M UK, with sales B&M UK 701 681 2.9% 656 6.9% densities significantly higher than pre-pandemic levels Heron Foods 311 306 1.6% 293 6.1% Franc
Slide 6: Group Revenue Bridge
Group Revenue Bridge REVENUE FY21-FY22 £ millions, 4,801 • Total Group revenue change of -2.7% year-on-year Net New Stores +£187m 44 4,673 • B&M UK revenue decline of -4.1% compared to 67 elevated levels of FY21 represents the net impact 133 (13) of: (2) (4) • One-year LFL revenue decline of -9.0% B
Slide 7: Group adjusted EBITDA Bridge
Group adjusted EBITDA Bridge ADJUSTED EBITDA BRIDGE FY21-FY22 £ millions, Group Margin 13.0% 13.2% B&M UK Fascia 14.5% 14.4% Margin 626 21 619 14 18 30 (2) (3) B&M UK (86) fascia only FY21 LFL stores FY21 new stores FY22 new stores Net of relocated & Central costs Heron Foods France FY22 closed stor
Slide 8: B&M UK Fascia LFL Sales
B&M UK Fascia LFL Sales FY22 SALES LFL COMMENTARY H1 H2 • FY22 LFL revenue decline of -9.0% on a 1-year basis but +16.8% vs FY20 +9.6% vs FY20 -5.0% vs FY21 -12.4% vs FY21 +13.0% on a 2-year basis vs FY20 • Slowdown in 2-year LFL in Q4 reflected the impact of 21.3% panic buying in March 2020 at the
Slide 9: Group Gross Margin
Group Gross Margin GROUP GROSS MARGIN (%) KEY HIGHLIGHTS • B&M UK fascia gross margin 52 bps higher than last year +77 bps • Sales participation from General Merchandise has 37.5% remained strong, with Gardening and Christmas performing particularly well 36.7% • Limited markdown activity once again
Slide 10: Operating Costs by Fascia
Operating Costs by Fascia YoY 2YoY KEY HIGHLIGHTS FY22 FY21 FY20 change change £ millions, • Operating costs fell slightly year-on-year, driven by B&M UK B&M UK 899 914 (1.6)% 734 22.4% Heron Foods 107 106 1.2% 98 9.8% • On a 2-year basis vs FY20, B&M UK business has delivered France 127 117 8.4% 11
Slide 11: Group Interest Expense
Group Interest Expense KEY HIGHLIGHTS • Cash interest and amortised fees relate to third party bank £ millions, FY22 FY21 YoY change debt and High Yield Bond Cash Interest Expense 27 22 21.8% Amortised Fees 2 2 6.9% • Group retains strong liquidity following recent re-financings Adjusted Net Interes
Slide 12: Cash Flow Generation Remains Strong
Cash Flow Generation Remains Strong OPERATING CASH FLOW £m COMMENTARY • Working capital outflow of £231m driven by: FY22 FY21 Adjusted EBITDA (pre-IFRS16) 619 626 • Pro-active decision to import Spring/Summer 2022 inventory earlier this year to ensure strong availability Change in Working Capital (2
Slide 13: Track Record Since IPO
Track Record Since IPO REVENUE AND STORE NUMBERS1 ADJUSTED EBITDA1,2 6 700 ADJUSTED EBITDA (£M) 5 600 +17% 626 619 REVENUE (£BN) CAGR 4.8 4.8 500 +23% 4 400 CAGR 3.8 3 3.3 300 342 2.8 320 2 273 2.3 200 1.9 223 1 841 1119 100 181 499 537 997 1050 1091 0 0 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY16 FY17
Slide 14: Simon Arora, Chief Executive Officer
Simon Arora Chief Executive Officer Ref: 750493 14
Slide 15: Strong Retention of New Customers Acquired in FY21
Updated Analysis Shows Strong Retention of New Customers Acquired in FY21 SHOPPING BEHAVIOUR OF FY21 NEW CUSTOMERS IN FY22 KEY HIGHLIGHTS 100% • In FY21, Barclaycard analysis identified two Proportion of new customer cohorts identified in FY21 cohorts of new customers1 who shopped with 90% 83% % of
Slide 16: Relatively Consistent Monthly 2-Year LFL Performance
Relatively Consistent Monthly 2-Year LFL Performance B&M UK 2-YEAR LFL BY MONTH Driven by exceptional 35% Gardening demand whilst +13.0% still under significant 2-year LFL 30% Covid restrictions Consistent 2-year LFL during in FY22 months when trading conditions 25% were more ‘normalised’ 20% 15% Re
Slide 17: Recent Trading versus Pre-Pandemic Levels
Recent Trading versus Pre-Pandemic Levels B&M UK LFL SALES VERSUS CY2019 COMMENTARY 16% FY22 FY23 • The 2-year LFL was distorted by panic buying in 14.4% March 2020 14% • Accordingly, we provide the monthly performance 12% 10.9% since the start of the calendar year compared to the corresponding mont
Slide 18: Broad Based Category Performance with Seasonal Performing Strongest
Broad Based Category Performance with Seasonal Performing Strongest 2-YEAR LFL SALES BY CATEGORY 2-YEAR LFL MARGIN BY CATEGORY A A B B C C D D E E F F G G H H I I J J K FY22 K L 2-year LFL L Non-Grocery Sales +13.0% Grocery M M N N Planned reduction in space O allocated to Clothing O -25% -5% 15% 35
Slide 19: Price Position on Grocery Being Maintained Despite Inflationary Pressures
Price Position on Grocery Being Maintained Despite Inflationary Pressures HIGHLIGHTS • We have maintained our price gap vs competitors • We monitor prices fortnightly on a range of products taken from different sub-categories • As at 26 May 2022, we are currently about 15% cheaper than the main supe
Slide 20: Strong Performance in Seasonal Categories
Strong Performance in Seasonal Categories GARDENING CHRISTMAS • B&M Homestores are increasingly seen as a “destination” • Good stock availability meant we were able to meet strong visit and 210 stores now have a Garden Centre customer demand • Agile supply chain and strong supplier relationships in
Slide 21: Competitive Advantages of B&M Buying Model
Competitive Advantages of B&M Buying Model EXAMPLE OF BUYING TEAM STRUCTURE COMMENTARY GROUP TRADING DIRECTOR • B&M is a buying-led business, with (Bobby Arora) the Buying and Merchandising teams comprising c.140 colleagues, • Trend “Look & by far the largest team in the Head of Merchandising Feel”
Slide 22: B&M UK Store Rollout Continues
B&M UK Store Rollout Continues LOCATIONS OF 34 OPENINGS IN FY22 701 STORES AT MARCH 2022 KW Key: Each postcode area is coloured in one of six shades depending on the number of B&M IV stores per 100,000 people in that particular postcode area. HS UK store target AB 0.5- remains at least 950 PH 0.0- 1
Slide 23: Recent New Store Cohorts Performing Well
Recent New Store Cohorts Performing Well FY22 STORE CONTRIBUTION % COMMENTARY • We target a sales area of c.20,000 sq. ft; ideally Out of Town 22.5% with convenient parking and space for a Garden Centre 22.0% 21.8% 21.6% 21.6% • The cohort of stores opened over the last three years 21.5% 21.3% conti
Slide 24: Outlook for B&M UK Space Growth
Outlook for B&M UK Space Growth PACE OF NEW STORE ROLLOUT CLOSURE PROFILE FY18 FY19 FY20 FY21 FY22 • Expect approximately 40 gross new stores in FY23 Relocations (5) (5) (8) (5) (2) Closures (3) (5) (7) (13) (12) • Recently lifted eviction moratorium should facilitate handover of additional stores A
Slide 25: Engaging and Successful Social Media Presence
Engaging and Successful Social Media Presence INSTAGRAM FOLLOWERS AT MARCH 2022 ENGAGED DIGITAL COMMUNITY 1426 Recently updated B&M App Visit social media platforms for “April Fools” 712 000’s video 557 500 329 317 282 Our website enjoyed 84 million sessions in FY22 despite being non- transactional
Slide 26: The B&M Brand is Well Loved
The B&M Brand is Well Loved HIGHLIGHTS • There is a strong affinity to the B&M brand, likely to be driven by a number of features that resonate strongly with customers: • Our EDLP value for money proposition gives us a clear identity • Playing a role in everyday life given our core Grocery/FMCG offe
Slide 27: Update on Transactional Website Trial
Update on Transactional Website Trial TRIAL OVERVIEW NEXT STEPS • We expect our proposition to help address a customer ‘pain point’, for example those who are unable to transport bulky products home in a car • We intend to adopt a “test and learn” approach during FY23 • Longer term, there is potenti
Slide 28: Robust Performance in Heron Foods
Robust Performance in Heron Foods HIGHLIGHTS • Delivered a satisfactory performance against the very strong comparatives of FY21 • Like-for-like performance improved across H2 as the comparatives from the height of the pandemic last year eased • Ambient and Chilled categories outperformed Frozen, wh
Slide 29: Excellent Progress in France
Excellent Progress in France FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS • Strong 2-year LFL sales growth of 21% versus FY20 • Product range evolution largely complete, with Clothing only c.12% of sales in FY22 and plans to • Gross margin expansion driven by further reduction reduce further in FY23
Slide 30: Future Plans for France
Future Plans for France FY23 LONGER TERM • Priority is to improve store standards and • Regard the opportunity in France as being store consistency rollout and market share gains rather than profit margin % expansion • Ongoing transfer of skills from B&M UK to assist with store operations, website a
Slide 31: 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 INVESTMENT IN ORGANIC GROWTH funded through strong cash generation • Ordinary dividends of 16.5p per share for the ORDINARY DIVIDEND full year • Not currently ev
Slide 32: Our ESG Strategy
Our ESG Strategy OUR ESG STRATEGY UNDERPINS OUR PURPOSE OF DELIVERING VALUE TO CUSTOMERS ENVIRONMENT COLLEAGUES • Reduce scope 1 & 2 carbon emissions by 25% by • Provide colleague development and promotion 2030 opportunities through a range of training programmes • Adopt a supplier engagement target
Slide 33: Significant Progress on ESG
Significant Progress on ESG ESG HIGHLIGHTS IN FY22 ONGOING DEVELOPMENT • Publishing our first standalone ESG Report to • Our commitment to investing in new stores in complement the launch of our new Strategy the UK and France will extend the reach of our value for money offer, contributing societal
Slide 34: Current Trading and FY23 Outlook
Current Trading and FY23 Outlook • Over the first 8 weeks of FY23, B&M UK LFL sales performance has been -13.2% vs FY22 and -11.5% vs FY21 • This reflects the impact of annualising against elevated comparatives in both years, driven by pandemic- related restrictions • On a 3-year basis versus pre-pa
Slide 35: Summary
Summary • Excellent operational execution has consolidated the two-year growth in both sales and profit • Strong performance in the core B&M UK business has been complemented by progress in France, which we now regard as a significant long-term growth opportunity • The Group is well positioned for t
Slide 36: Questions and Answers
Questions and Answers Ref: 750493 36
Slide 37: Appendices
Appendices Ref: 750493 37
Slide 38: FY22 IFRS16 Reconciliation
FY22 IFRS16 Reconciliation Appendix 1 Pre- Post- £ millions, IFRS16 Change IFRS16 Notes Revenues 4,673 - 4,673 No change Gross Profit 1,752 - 1,752 No change Operating Costs (1,133) 209 (924) Operating lease rental cost is removed Adjusted EBITDA 619 209 828 Adjusted EBITDA increases significantly %
Slide 39: Like-for-like track record since Global Financial Crisis
10% 20% 25% (5)% 15% 30% (20)% (15)% (10)% 0% 5% Q1 FY08 Q2 FY08 Q3 FY08 Q4 FY08 Q1 FY09 Q2 FY09 Q3 FY09 Q4 FY09 +10.4% Q1 FY10 FY08-FY10 GFC Average during Q2 FY10 Q3 FY10 Q4 FY10 Q1 FY11 Q2 FY11 Q3 FY11 Q4 FY11 Q1 FY12 Q2 FY12 when opening new DC in FY11 Q3 FY12 Disruption caused Q4 FY12 Q1 FY13 Q
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