B&M European Value Retail S.A.

Morning, everybody. Thank you for coming. And clearly a big thank you to America. Investors, I'm sure it's quite early and you will be listening. So much appreciated, okay? Hopefully the presentation will be fairly short and punchy. And I will try to leave as much time for Q&A at the end. Questions, as always, if you're not here, they will come to Dave and Dave will fire them back at the end. Third presentation, you've seen me here in the first two. We basically introduce different team members. It's a different group today. They will introduce themselves. I will just introduce them with the first name. Gareth, you met him before. Leslie. The two of them will have some interesting bits to share. B&M core business. And then we have Cedric and Vianney. French team. Mark doesn't need introduction. And you will hear from the guys in a couple of minutes, okay? So... Presentation is quite simple. I think you can see it on the screen. I will just concentrate on two or three key points, okay? First half, as you know, double-digit top line growth and EBITDA 16% growth in the half. I'm comfortable with that position entering into the second half. Cash, very well controlled. Mike is going to expand on his section, but what I would like to highlight is the quality of the stock exit in the first half, which gives us a lot of confidence into the entry golden quarter margin performance. The stock is in very good shape exiting the half. Just to anchor that, which is important, we've grown the top line at 10%. And we have almost held stock at cost flat, pounds, half and half. So I think that's a key point heading into golden quarter that shouldn't be lost. Edit the range full year, 620 to 630. We still have 19 weeks to trade. We are in the middle of golden quarter. It's a narrow range. But I think the way to think about that range for the full year is I'm very confident That is a base case. It will not take a lot to breach it. So let me give you a bit of color without getting into the numbers. Franz and Heron have very strong momentum. So it's a big tick. So just to give you some color in here. We never shoot to a midpoint. So you can assume that I shoot to the top end. And this conservative range does not require much more than very low positive single LFL. So if you were to take the last three weeks of the golden quarter guidance I have given you, and that's a big assumption, but if that 4.5% of the last three weeks of golden quarter are sustained into golden quarter, this will be breached at the top end. So three points in there. It's a base case conservative range. Margin performance is entering golden quarter in top shape. Stock is clean. Sell through is where it needs to be. I'm confident. And of course, Mike is going to elaborate very tight. Conservative range. Underpinned by LFL momentum. Very strong gross margin performance. And cost control. Store openings, this has nothing to do with Wilco, by the way. So what gives me the confidence of being able to increase that range is three things. Yes, the pipeline is being built very confidently with a high level of quality site selection, but operationally, where is retail standards Gareth? Where is supply chain? Where is buying flexibility? allows me the confidence to start ramping up store openings. So it's a combination of quality of sites, operational standards, and basically the buying supply chain piece. The key word in here, guys, is not less than. I'm not saying $1,200. It's not less than. And when you look at the RNS, I'm saying, current year 35 and for the next two financial years again I haven't said 45 I've said not less than not less than one point of color you can assume that the store openings into next financial year are going to be heavily front-ended why because the pipeline is ramping nicely you can extrapolate what that means for the P&L. That's a good thing, tick. So I want you to take a couple of messages in here. This range with 19 weeks to go, it's a conservative range, doesn't take much to beat it. I'm just telling you 19 weeks in advance. Baseline, margin momentum tick, stock very clean, and the pipeline actually in good shape. I'm not going to get into this graph, as you know it. I just want to remind ourselves of one key number. Pre-pandemic year, FY20, 342. This range already takes us back to the peak of FY21. So this is a business that has shown discipline on capital, on returns. And we have gone four years from 342 to a range of 620, 630, reach 630. All of those conversations we used to have a year, year and a half ago, was it the pandemic, was it not the pandemic, I think those two charts sum it up for me. Very briefly, I'll expand on stores. They're in pretty good shape. I'm very comfortable how standards continue to increase. The discipline, availability is where it needs to be. Pipeline, we've spoken. France and Hebron continue to motor ahead. I'll answer one quick question straight on. Why is the EBITDA margin of France in the half slightly lower than last year? It's because basically you have a COVID one-off last financial year. So I'm flying the businesses in pretty good shape. Okay. Mike, to you.

Good morning. So I'm going to start with an overview of the P&L. This is, to my mind, a straightforward and strong picture. Firstly, revenue up 10.4%, reflects all three of the businesses growing strongly from our proven strategy. Secondly, gross profit margin up 191 basis points. Two things behind this. firstly the expected improvement in our trading margins if you look at BNM UK our trading gross margin increased by 114 bps which really reflects the quality of the execution of the garden and outdoor season this year we had a clean stock position coming in this year and we've got a clean stock position on exit very importantly the balancing item in there principally is our usual foreign exchange hedge accounting that shifts costs some extent between administration costs and cost of goods sold. As we reported last November, there was an unusually large swing in the prior year comparable. I think if you focus on the trading margin improvement, I think that gives you a particularly fair picture of underlying what we've seen in the business. Moving on to our key measure of profit, adjusted EBITDA. That's up 16.1%. Alongside the higher gross margins we've already talked about, our actual operating costs are growing at a slower rate than revenues. So a strong operating performance overall. So looking at the detail of the revenue, you can see progress in each of the businesses. UK like-for-like growth. up 6.2%, total sales growth up 8.1%, particularly strong first quarter, after which we saw the expected second quarter moderation. As with many retailers, this was also accentuated by the impact of unseasonable weather. As you've seen in the past, in a business that's as dynamic as ours, extrapolating very, very short-term sales growth periods leads you to the wrong conclusion. What is very clear to us is that over time, we're consistently outperforming the UK market, as we have done over the last 12 months. With our continued like-for-like share gain and also our new store openings, we see the UK as having significant long-term growth ahead. France and Heron's revenue growth speaks very much for itself. Both have double-digit like-for-like, underpinning those total revenue growth numbers you see below. Finally, though, the critical metric that we really do focus on is our customer transaction numbers. And once again, I can confirm that they are meaningfully positive for each business in the period. On adjusted EBITDA, I'll just focus on the margins generated. The UK, up from 10.6% to 11.4%, driven by the gross profit margin recovery, together with cost discipline. These are strong margins in the sector. and are an appropriate benchmark to my mind for our future first halves of the year. For France, our margin is up 50 bps to 7.8% on an underlying basis, as Alex has touched on. That's good progress this year and is another step towards moving the French profit margins towards the benchmark level seen in the UK. Helen, 6.6% for the period. Once again, sector leading. Our underlying operating costs are shown on slide 11. So as I've mentioned before, these exclude FX hedge accounting and similar elements that distort the year-on-year operating comparison. This year, we of course had to mitigate the 9.7% increase in UK minimum wage rates and properly serve our transaction volume increases that we've seen. In considering the pressure that we've had to manage here and remembering that employment costs making up more than half our operating cost base, it's great to see the UK coming in with 50 bps lower operating costs year on year. This discipline and cost is particularly evident in France, where the greater sales growth has also driven strong operating leverage within the business. Finally, moving on to cash generation on slide 12. We very much returned to a normal seasonal trading cash flow pattern this year, similar to that which we saw pre-pandemic, with a modest working capital outflow in the first half as we build up high-quality stock to trade our golden quarter. Year on year, our group stock position, Alex mentioned this, is up a little over 2%. Our revenues are up over 10%. That's the discipline we're working with. Our working capital outflow will reverse through to the end of our 52nd week, and we'll maintain our approach of keeping the stock position very much clean and tight. Our CapEx approach has been disciplined, focused on the new stores that drive the proven returns, alongside spending on appropriate maintenance. This is particularly stark, the numbers there, as you note that the consideration for the Wilco's transaction is included within the infrastructure line. And with that discipline on profits, on working capital, on capex, you see, once again, our operating cash generation has been strong, leading to a step down on our net debt and our leverage ratio to 1.1 times. We're therefore declaring a 5.1 pence interim dividend calculated with reference to the top end of our usual payout range of 30 to 40% of after-tax profit. So finally, just to sum up before handing back to Alex, a few points of emphasis for me. Firstly, revenue growth. Total of 10.4% for the period, driven in the right way by increased customer transaction numbers. Secondly, discipline. For me, that's discipline in the cost base, discipline in the stockholding, discipline in the capital that we're investing. And thirdly, that means that's generating the free cash flow. On that debt, £36 million lower year on year after the right investment in the business's growth. and also after £345 million of dividend payments in the last 12 months. So that's over £380 million of cash generated in the last 12-month period. We're going to focus on these points as we go forwards through the remainder of the financial year and beyond. Thank you. Back to you, Alex.

Thank you, Mike. Gareth, if you've leaked the screen, you kick us off with BNM UK.

Good morning, everybody. I'm Gareth Milton, as Alex introduced. I've met many of you before at previous couple of these presentations at BAML. I've been with the business 23 years and I'm the UK stores director currently. So I just want to take a couple of minutes to talk to you about our grocery category, but not through the eyes of the buyer, which you'll hear from shortly, but from the eyes of the shopkeeper from my team, I guess. There's 700 of those shopkeepers out there. So just to cover a couple of highlights from my perspective, the first one I want to talk about is price. So everyone in the business, from the buying team to the store manager, are obsessed with price. And not just the absolute price at the shelf edge, but the gap in price between us and the competition. Our price point, as it stands, is currently as strong as it's ever been and more important than it's ever been. And that gives us a couple of advantages. And the first one and the main one from the shopkeeper lens, from my perspective, is The everyday low price model that we have is simple. It's simple for the customer because it's no complicated multi-buyers and no complicated offers. And it's simple for our store managers to understand how to push value. So as they trade the stores and we encourage our store managers to trade their floors hard, they have more discretionary space available to them, probably the most retailers of our size out there. They trade the floor hard. They can back a grocery product knowing that the brand is strong, knowing that the quality will be good, and knowing that the price that they push will be competitive. So it lets them trade their stores hard and drive that trading momentum forward. The second thing to highlight is supplier collaboration or brand relationships, whichever you want to refer to it. This is strengthened over the recent years and it gives us two things. It lets us trade value and it lets us trade volume. It also, because of those strong relationships, keeps us bang up to date with newness. It makes our range very credible. We're first to market with lots of new ranges. The other thing from the shopkeeper lens of that brand relationship is, in the day-to-day way we do business we have a triangle of buying logistics and retail and we forward plan events and we're able to smooth out peaks and troughs within those that activity which means that we keep our business and the operation very simple which lets us underpin the everyday low-cost model it means that we can execute things well and execute them right first time but it also means that i can maintain consistency in the in the store estate so we don't compromise standards at the expense of landing trade driving activity uh that's a key a key thing for us as we move forward and then the last thing that i want to talk about is availability i guess underpinned by everything else that i've just talked about Our availability throughout all of the grocery categories is excellent. It's excellent in the distribution centres, which means in turn it's excellent at the shelf edge where the customer is, which is most important. And what that enables the store managers to do is it again underlines this everyday low cost model because running the shop becomes much more simple and straightforward. We don't have gaps. We're not constantly re-merchandising and taking time out to address poor availability. It also means that as we have customers that trade down to us, they're able to come to our stores, buy the same branded products at the everyday low price. and have the confidence that as they return, time and again, that those products will be available on the shelf all of the time. And so from the store manager's perspective, it gives them the confidence to chase lines and set their stall up to trade as hard as they can. Those kind of three things for me make our grocery offer. For me, as the shopkeeper rather than the buyer, the compelling offer that it is It gets our store managers excited about newness and products and gives them the opportunity to chase and trade their own stores in a bit more of an entrepreneurial way than they may be in other businesses. So that's it from me. I'm going to hand you over to my colleague, Leslie Buchanan, who's going to talk to you about her categories. Thank you, Gary.

Morning, everybody. I'm Leslie Buchanan. And I work under Bobby Aurora, heading up the homeware buying team. I've been with the business for 12 years. And today, Alex and Bobby thought it would be a really good idea for me to bring some of this product to life. So I'm going to talk about three things. The first thing I want to talk about is travel. So China opened up again for us earlier on in the year. And we were one of the few UK retailers to get our first straight as soon as it opened. And that was great because we got our buyers back in touch with the supply chain. I'm back with the product and the development. One of our things that we talk about every day on the buying floor is B&M speed. And getting back into China gave us that B&M speed again and got us greater speed to market. And I've brought some products along. I'm not going to walk through it, but you can see it. The first group of product I've got on the floor here. is a really good example of product that we saw trending, trending through social media, trending through the supply chain. We got onto that in China. We bought it, and we've had it on the shelves at the beginning of September, and it's selling through already. But the main thing of getting back there was that face-to-face negotiation, so getting back in front of the supplier again and really hammering those cost prices down. So the negotiation was key. The second thing to talk about is Simply. We launched our Simply brand last year and Simply was our resetting of our value message and reinforcing our B&M values. It's gone from strength to strength. It is mainly volume lines. They're great prices. They're everyday essentials. They've now gone across most of the non-grocery categories, so into DIY and cleaning. More recently, again, with our B&M Speed, we've looked at other categories that we can grow within the Simply message. Party being one of them, so getting us set up for Christmas and New Year, we've got a Simply Celebrate range. Our Kids offering, so Kids is a big part of our business, and the Kids range really gives us some great fun with print, pattern, and colour, and we can offer... great dining we've got great tableware drinkware and that's moved on to textiles as well so really cool we've got a glow in the dark do they set down there and which mixed with throws is giving the kids great bedroom we've also gone energy saving again so we we went last year we talked about heat the human and not the home we recognize that our customers looking for value and looking to save money so this is extended into our throws offering i can see some of those passed around there and into our energy-saving products to keep you warm at home. And then finally is what we've done to help our store colleagues trade on our Simply message. So we've brought in some lines which can be on clip strips, dump bins, some examples down there. We've got some straws and we've got some ice cube trays, so perfect with soft drinks, alcohol. store colleagues can trade them through. They're brilliant pickups, great basket add-ons, and it's very easy to merchandise. And the last thing to talk about is availability. So like Gareth said, availability on KnownGrow3 has been excellent. We took a different approach to availability. We've identified never out of stock ever lines. And those lines in the main will be our volume drivers, our great price everyday essentials. And those lines that as a B&M customer you would expect to find when you come into our store. What's allowed us to do this and keep the core availability going is that we're working now on a test and repeat model. So with our new lines, And what this does is when the new line comes in, obviously if it's not a great line and it doesn't deserve a place in the range going forward, we're not sitting on heavy stocks. It minimizes our markdown spend. We can sell it through. If it's an amazing line, obviously B&M Speed, the agility of the supply chain, we can get straight back into it and it can be back on the shelves as quickly as it came in first time. And I'm going to hand back to Alex.

Thank you, Leslie. Fantastic. Good to see product back on the shelf. Back on the floor. Thank you, Gareth. Thank you, Leslie. Gareth, unfortunately, knows that this light is what takes me, gets me out of bed every morning. This is the bit I enjoy the most, you know. I'm making a point with Gareth that I don't spend more than one day in the office, and I spend four days actually walking the shop with him. I think he got used to it by now, don't you? I think it's a good... It's a good partnership, actually. Look, I'm very happy where we are. Standards are much better and consistent than they've ever been. It will never stop, store by store, aisle by aisle. And it's actually a bit of a cultural reset. Note that the team has taken on board very well. So this is where I spend most of my time. This is what the customer sees, and frankly, I enjoy looking at it with my own eyes. Supply chain, as Gareth has said, is in a pretty formidable place actually. Stock is where it needs to be, flowing well, productivity basically, a step change in terms of cost to sell. So the whole triangle, supply chain, buying, retail, is in harmony. Property. Lots of detail in here, guys. I will just repeat the three points. 35 store openings this year, not less than 45 each of the next two financial years. And you can assume that FY25 will be very front-loaded, which is a major shift where we've been in the last two or three years. Quality of the opening, size, productivity, sales density, accretive so i'm happy with our process and that combination of supply chain store standards and buying flexibility is what gives me confidence to start ramping up that pipeline 1200 not less than okay cedric and gianni cedric you can introduce yourself yes thankfully

Morning, everyone. I'm Thorek Maier. I'm French, so sorry for my English. So I'm a trading director for B&M France for now six years, and from the first day that B&M Group bought the company in France, and then this retail field for now more than 20 years in Europe and also in China. So to explain to you what happened in France, You have to know that FMCG is clearly performing strongly. And we need to follow this high growth. That's why we have got lots of things to do. And the first thing that we have done to continue to attract customers every day is to have increased drastically of numbers of SKUs in FMCG. And so that we can continue to have lots of customers business and our daily transactions are growing a lot. Two factors are really keys in this journey. First one, as we've got in UK, is the big signatures of contracts and partnerships with well-known A-brands such as L'Oreal, Unilever, Kellogg's, Red Bull and so on. That's why we have got a very good availability regarding FMCG in our stores. Second thing, is clearly our every day low price discipline and to be able to compete with the top retailers in France. Moreover, to reinforce and really underline our price messages, we have implemented in all our stores in France power base per ice with very clear price message like this. So everywhere we have got this in our stores. We just left now, Vianney.

Thank you, Cedric. Vianney? Don't forget to introduce yourself, Vianney. Sure. Well, good morning, everyone. I'm Vianney Dorniouko, French, too. I've been working at B&M for five years as a head of general merchandise. Before that I worked for six years in China for the major retailer. As grocery, home category drives the footfall and I'm pleased to announce that for the third year we won the award of the best retailer of the year for home decoration in France. So we are very honored about that. And one of the keys of our success in France, I should say, is the exclusivity. We are exclusive thanks to our product level. We have exclusive products. And by the way, we would believe that we could sell thousands of nutcrackers in France. Such a British product, no? So all of this has been possible thanks to a strong synergy with UK. So France and UK, we buy together, we buy massive quantity, and we are proud about that. As you know, B&M is a fast-moving retailer. We buy direct from factories. We have a common sourcing team in China and all countries. And in France, we are committed to adapt the range to the economic situation. This is very important. Our mission is clear, is EDRP, every day low price. And by focusing on core and utility products and delivering exclusive products with amazing packaging, yes, we have fantastic packaging at B&M, we have reached a double digit growth in home categories in France for H1. So the last point is that we always keep in mind the EDLC, every day low cost model.

Just to prove that, we improve productivity in store by developing one more CDU. So this is ready to sell packaging, easy to implement in store.

You just remove the top and you put on the shelf. Thanks to that, we improve the productivity in store. We've got plenty of ideas like that. So it's simple and efficient.

Thank you. I'm going to embarrass Vianney a bit. I think he speaks better Chinese than English. So can you put a few words on Chinese, please, Vianney? He's fluent in Chinese. Come on.

I'm not sure if there is Chinese.

And that's very important, guys, when you go online. Thank you, Vianney. You need to learn a bit of the trick as well. When your direct report is actually more fluent, that's a challenge.

You don't want to know that.

You don't want to know that.

France standards are exactly going through the same journey as B&M UK. I'm not going to expand on the detail. The guys know it, live and breathe it with me in the same way as the B&M UK team. Absolutely heading in the right direction. You can see, as Mike said, the productivity coming through in terms of stores. The business is entering in the right shape into golden quarter. trading strongly confidently and supplied chinese in pretty good nick so that's all what i'm going to say about france i have confident that the guys will have a very strong second half of the year heron mike said it is world class uh maybe the margins for a food business very strong availability same discipline edlc edlp flexible supply chain, no gimmicks, concentrate basically on trading the shops hard. Very good momentum in the first half, very good momentum into the second half. So very happy with those two sides of the business. And I'm going to leave you, before we open to questions, on two or three points. Our strategy is the same, hasn't changed. We are a limited assortment discipline discounter. In perfect balance, FMCG general merchandise. We move at B&M speed. We're highly commercial, entrepreneurial. And the team has been strengthened in certain elements, and you will continue to meet them every half where we need to. So I'm very happy, actually, the hires we've had. So we've had supply chain strengthened. The French team is performing very well. So the team is in good shape overall. Outlook, as we've said, I've given you a baseline range for the year 620 to 630. Last three weeks of the first six, four and a half. If the four and a half continues, we've reached the range. Margin is exactly where it needs to be. Stock is razor clean. One analyst reminded me our pound stock is not only flat year-on-year, half-and-half, but it's not substantially higher than what it was pre-pandemic. You can only do that whilst delivering world-class availability if you have a supply chain which is actually humming in all cylinders. And what that means for the second half and entry into the next financial year It's a gross margin percentage. It's exactly where I want it to be. There is no skeletons in the covers. Stock is clean. The system is not clogged. It's just flowing as Gareth said nicely. Same in France, same in Heron, same in B&M UK. I'm confident about the year. The pipeline is in good strength. We're going to keep very disciplined. very high quality of sites, will not compromise standards, and that triangle which is buying, retail and logistics, and product-free business is exactly where it needs to be. So I think we can open to questions. Warwick.

Sorry, Alex. Can you ask people who are online to... Yes, I'll remind them so they can pass the questions and we'll fire them up.

Warwick, go ahead. Thanks. Warwick O'Connor, BNP Paribas. A couple of questions. Good morning, Warwick O'Connor to BNP Paribas. The first question is really just on current trading. Could you explain the acceleration in recent weeks? Obviously, the weather has normalised. What does that mean for different categories? So how confident should we be that that is a meaningful run rate?

Sure. I think similar to, I think from memory, what Primark and a couple more highlighted, the first couple of weeks of the quarter were unusually mild. Actually, where we are now, it's in the perfect stable weather. So what are the categories that absolutely come in very strongly? Toys. Let me give you an example of toys. Toys is a bigger category for us in autumn-winter pounds than garden is in spring-summer. And once you get that weather, people get into a Christmas mindset, boom, toys start flying. this guy is catching up actually with toys coming out of the shelves very rapidly and once it kicks in kicks in very rapidly home as lovely says performs very very strongly throughout but you get some of them the ropes the more weather related beats that basically gives the uplift and once the weather comes in which is where we need to be then you start trading strongly so um look we're still in week 19 but I don't need a 4.5 LFL to get to the top of that range. That's a message work. So weather has normalized. It's in cool shape.

We're just trading hard. Thank you. And the last question is just on space expansion. You've not really majored on the acquisition of the Wilco stores, but do you expect those to be at least the average density of the group?

At least. And I will share one point of detail, and I don't want to say too much because you can imagine negotiations are happening. But I think it's proper that I disclose this. One of the 51 was a freehold. 50 was a leasehold. Once you remove that freehold of the 51, Mike, what we have paid is actually peanuts for that optionality. But the inside word is, I am renegotiating every single lease. Every single lease. So if you see any competitor opening them too quickly, is because they are not doing it. And I think that comes to be an indiscipline. I am never going to compromise operational costs, productivity for a dashboard growth. So the pipeline is in good shape, but I am renegotiating every single list.

Thank you. Okay. David. Thank you. David Drew from Bank of America. Alex, it seems that BNM continues to sort of invest in price, and I guess the Big Four, your Big Four competitors are doing that as well. Can you perhaps just discuss where the value gap is between your Big Four competitors? I think the last number you put out was a 15% to 20% discount in December. And then my second question is just, do you want to take that first, and then I can... Yeah.

So if you take the Big Four, are they the cheapest? Of those four, we are never less than 15% cheaper. Against the most expensive, or let's say the two big ones, we are easily 23% to 24% cheaper. You take all the noise they put on club card or neck bar, and we're about 20% cheaper.

Okay. After the loyalty. Okay. So it hasn't degraded. Okay. Thank you. And then perhaps a question for Mike. I'll reserve it. Oh, Mike, yes.

Mike, yes. I wouldn't put this guy under pressure.

Mike, I think it was slide 11 where you were showing the growth in OPEX for the BNN UK business. I think it came out at 6%, if I'm not mistaken, year on year. How do you reconcile that to the 15% we see on a reported basis? in terms of SG&A, what's the difference?

Yeah, so I think as I touched on, the other factor that's influencing the growth in SG&A costs is the movement of FX income and costs between the cost of goods sold and administration costs. So principally, that's the balancing item. It's not really a factor that you should worry about in future periods. It is far more something that distorted the prior year comparable. So in particular, if you think where we were in terms of exchange rates and FX hedging impacts, we were just coming out of the period of post-LizTrust mini-budget, which distorted the pound-dollar FX rate in the prior year period.

Okay, great. So core SG&A inflation is running around 6%.

So core SG&A inflation running about 6%, and you can see that that's meaningfully less than the growth in our overall revenues. Okay, great. Thank you. Thank you, Mike.

Thank you. Richard James in RBC. Could I ask a few questions, please? The first one's on the longer-term UK target store count, not less than 1,200. How have you sort of arrived at that figure? I mean, is that about broadening demographics? What does that assume in terms of London and also sort of average size of store, I suppose, as well?

It's a conservative number. It could have been higher. Mm-hmm. I'm a conservative kind of chap, so if I'm putting not less than 1,200, you can read that's a minimum. There is enough demographic catchment analysis based on actually how we trade, availability of sites, and as the question was asked, it's all non-dilutive. Yeah. And it's a confidence. If I look at my openings over the last two years, it's the confidence of the sales densities that we're getting. The broadening of the offer is reaching broader customer segments and basically giving me the confidence to go for that higher number. And as I always keep saying, Richard, I will never compromise on the returns of those assets. So when I say not less than $1,200, you can read that's a conservative number.

Okay, great.

Thank you.

And the other one is just about, I think you mentioned during the presentation, test and repeat. I don't know when that sort of started. Has that just started? Are there any particular categories that relates to how's that sort of going so far?

I'll answer that question. So if you go back five years, the buy would have been a bit more committed, a bit longer, and a bit riskier. The supply chain is now so flexible that actually you don't have to put an initial big order and the flexibility of the factory basically relationship we have. If Leslie's lines start shifting, basically she does not sitting in huge quantities on the depot, she can basically replenish very rapidly. So all of this contributes to a lower stock holding, the supply chain works nicely, stock is lower, everybody wins.

Is the replant coming from the same factories though? 100%. 100%.

And those relationships which are well established are working very well. So, is that a good summary, Desi? Yes. Thank you. Thank you, Richard.

Morning. Morning, Nick Coulter from Citi. Two, if I may, please. Firstly, just to come back to kind of peak like for likes. Obviously, you know the weekly cadence. We don't. But you're running into some quite heavy comps. Just to kind of get your sense of why even like-for-like should, I guess, be positive across that period given last year. And then, secondly, the space contribution across the last couple of quarters, the contribution to sales, seems to have moderated a little. And just to understand why that might be in terms of phasing or clashes. Thanks so much.

So two quick questions. We plan internally conservatively, but the business has sufficient commercial momentum to drive positive LFL. If you look at our half one performance, almost half of that LFL is transaction numbers, which is for me the health of the business. So my inflation component of LFL is substantially lower than the vast majority of competitors. Customers are coming through a deal. Gareth has to basically deal with it. He sees it on a daily basis. What gives me the confidence that those transactions keep coming and the LFL is positive? Price positioning is rock solid. Standards are good. Customers notice it. We gain market share. And I think to your key question is, golden quarter will be positive LFL. Of that I'm confident. But it doesn't have to be 4.5%. I just need a substantially lower positive LFL to get at the very, very top end of that baseline range. And in terms of the openings, remember, the low point was the low 20s that we opened yesterday. prior financial year. As we have rebuilt the pipeline, there was always a backend lag. 35 this year. And again, 35 is a conservative number. It might be a bit higher. Let's see how it plays out. It might be a handful more. Who knows? As you start building that pipeline, basically you get the phasing. So what is a sweet spot? The sweet spot would be, on average, a store opening the year three to six weeks, right? Easier said than done. But as the pipeline comes in, that phasing basically normalizes. So I think you will see the component next financial year of new space to ramp up rapidly. Thank you. Pleasure.

It's Adam Cochrane at Deutsche Bank. Hi Adam. Going to be a bit greedy and go for three if that's all right.

If you follow the first one so I can answer each one I've done.

I thought as soon as you have a French team here I thought I'd try and ask what's going on in the French consumer market? You know we've heard from other companies that it's quite tough in France maybe more so than in the UK and is that playing into the advantages of of B&M in France in terms of the low pricing?

I'll answer that question succinctly and then I will pass it to Cedric. It's not any different than in the UK. I mean, clearly, price wins in France. What is the equation in France? On top of opening and ramping up with discipline the openings, it's all around closing the sales densities between France and the UK. That's a strategic and that's the objective. if i say in the uk bnm roughly half of the lfl is all lfl transactions you can read in between the lines that in france i would say a good two-thirds of that lfl is transaction numbers so you can see the custom account and the team is really focused on price availability and standards and the consumer is voting with the feet is that our first summer cedric

Exactly. Anything else? Any more call or you want to add? I agree with you when you say that it's because of EGLP, it's true that inflation was very tough also in France, but we succeed thanks to the partnership we've got now with the brand to have very good availability and to keep in mind that DNA is really a DLP. So we don't change really this strategy.

What gives me confidence on that French team strength on the FMCG side? In December, we were tracking the price point. These guys don't mention them. He's tracking against six competitors at FMCG by line. I see it every week with Bobby. And actually, even with still a small business, he's already winning in pricing.

You touched on my second question, really. You talked about the low inventory position. Can you just give us some numbers on how availability has either improved or at least been maintained on the shop floor despite the lower inventory number?

I would say it's substantially improved. Gareth, do you want to quote a couple of examples?

For FMCG availability, we are average. week in, week out, 98% to 99% distribution center availability, which translates to the same number at the shelf edge where the customer is. Because the supply chain is in better condition now than it may have been 18 months ago, two years ago, it means that we are able to replenish that quicker. There's no lag from the distribution center, which means the delivery schedule is more effective and the replenishment is replenishing what's sold. if not more sold two weeks ago.

So the debtors are on their front foot and without quoting numbers, Leslie, look, there is no home department or toys department that actually will be affecting customer experience. I think availability is, if I compare it to last financial year, what brings it to life, I think the transition away from summer into autumn, winter, I would say, Gareth, two or three weeks ahead. three yeah so what the customer is seeing this year compared to last year stock clean new ranges come in three weeks ahead i mean that's a hell of a of a of a customer window of of of availability final question final question 620 to 630 is a pretty tight range given the volatility you've seen in like for like in just six weeks you know do a bit of math it's swung around quite a lot

What's made the decision to have such a tight range on PBT, and the fact that you think you can breach the range, doesn't that mean the range should be wider?

I haven't said I will breach it. I'll say, what I've said is, if you extrapolate from 1.5, that would breach it. If I don't put a narrow range, then I get accused that I don't give a range of guidance. So you guys want it all, yeah? So I'm trying to put my neck on the line in here, guys. I'm just giving some confidence, so... done if you are whatever the english race yeah so what gives us confidence price standards stock clean and um margin in very good shape so stock is clean margin is in good shape and as you know what drives this business what drives a um a bnm um general merchandise, half business, actually margin makes the P&L significantly more sensitive than LFL, as long as you're not overbuying. So the entry and the rate of sale that we can see gives us, Mike and I, the confidence to put another range. Look, we still have 19 weeks i'm putting my neck on the line as ceo i think i'm confident i'm not saying i'm going to breach it what i'm saying is that range does not require a four and a half percent lfo wait for early general we'll see thanks dave

Yeah, we've got quite a few coming in online. First one, have you seen any changes in customer behavior in the size of basket or product mix in both the UK and France?

I think we're ahead of the customer over the last 12 months in de-risking a necessary high price point. Great example, we don't do big furniture. So we're, I mean, Look at the product we have here on stage. We are acutely conscious on the price point. ATV is holding well. I'm happy that we are at a much lower level of inflation than the competition. I think we continue to win a market share. You can see that clearly. on some of the core FMCG categories. I would say food, cleaning would be good examples, Gareth. And in reality, if we were not gaining share from higher price point competitors, we would not be able to trade in general merchandise by definition on a positive LFL, which we are. So, look, the consumer is under pressure. Undoubtedly so. It's been over the last 18 months. What are we doing about it? razor-sharp focus on price, presented Garrett in the best possible way, and just be conscious that we're not in the business of basically putting in a high price point unnecessarily.

Dave, second question. Okay. Can you confirm the number of relocations and closures for BNM UK and Heron for this financial year?

So the bulk has already happened in half one. BNM UK, there might be two or three to go in the second half. So it's minimal.

And then going forward as an annual?

Let's say three to five per annum BNM UK.

Okay.

Again, I only close...

if it's enhancing okay so it's it's it's it's a creative asset recycling and i would add actually to that alex that um where there is a replacement it's usually uh considerably larger than the store yeah we are closing smaller stores so next question absolutely uh capex for going forward like the increase in store numbers

So the way we think about capex is the balance is maintaining the right level of maintenance capex. We see that as sub 1% of revenues. And then secondly, we have as much capital available for new store growth as is required because our new stores are delivering proven returns. And so if you look at the average cost of our fit outs, we think that that's going to stay steady moving forwards and it will just link to the number of stores that we are opening. So no major increase. No major increases.

Okay. And on the store rollout, are we looking for a wider range of store sizes or formats in order to meet this target? Steady. No change. Steady. Okay. There are more questions, but I'll turn it back to the room for more questions. Any more questions in the room? I'll carry on then. One more at the back, Dave. One at the back.

Thank you, Dave. I think we probably have two or three minutes left.

Yeah. Hi, thank you. Good morning. Matt Chadwick from Berenberg. Just a very, very quick one for me. You touched on the broader stock reaching a wider demographic of people. I was just wondering if you have any statistics for customer loyalty. How do you know that you're going to retain those customers moving forward?

Customer transaction numbers being positive. That's the health of the business.

Do you track customer loyalty at all? Can you see if you're retaining those customers?

We don't do marketing. We don't do customer research. I think we measure it in detail.

Dave, a couple more? Yeah. Are there any plans to increase automation within the warehousing? Nope. Okay.

We're a CapEx light business. We have highly productive supply chain. I don't buy shiny new bits.

So pushing on that point in more detail on the question, some of our competitors have automated warehouse that frees up more man hours for the store. Any comments on that?

I think I remember saying in the past confidently that we trade in BNM UK 12% to 13% EBITDA margin. I think they have their choices to make themselves.

Okay, and I think that was the last question. I think I've gone through them all now.

Bang on time, BNM Speed. Good to see you guys. Thank you.