B&M European Value Retail S.A.

Good morning, everyone. Thank you for coming. And good morning, US. I know you are early in different cities, East and West Coast. So thank you for joining us. We have a full lineup today. You know Mike, Gareth has presented in the past, John Parry, Anthony Giron, MD in France. What I'm going to do today is keep it very short for myself so you get to hear the team on basically how the business is set up for the year ahead and thereafter. And with a bit of luck, guys, if we can keep it sharp, we can give a good half an hour for Q&A so we can get into the detail. I take the R&S as a given. So I will just make a couple of points on each slide. So you've seen the numbers. Looking back at FY24, for me, there are two highlights in here. We're a financially conservative business. We're not a business that believes in high gearing. We're a disciplined, conservative financial business, and actually having a leverage ratio just under 1.2x for me is absolutely the right shape in the business. So I'm happy with that result. What's underneath that, if you look at the detail, Broadly speaking, we have put 500 million pounds year on year on net sales. And total stock holding has barely moved year on year. From memory, I think it's increased year on year 11 million pounds, which is nothing. So we've put 500, half a billion pounds on net revenues with broadly stock holding flat. And that's on the back. of last financial year where the stock holding was also flat pounds. What does that tell me as a CEO? The supply chain is incredibly robust and efficient. We don't have to take any unnecessary risks. The quality of those earnings, given the quality of the stock, is in excellent shape. look forward the quality of your stock is always your margin tomorrow so it gives us a very good momentum heading into new year with having razor sharp stock but the best availability the business has had on show since i've been in the business since 2020. okay go back four years we have delivered 1.8 billion pound check to shareholders cumulatively over four years. 1.8. This is a disciplined business that is all around sustainable, profitable growth, which is cash generating back to the shareholder. So those are for me the two highlights of FY24. You've seen this chart before. The blue line is interesting. But you've heard me before, I'm not in the business of driving market share. I'm in the business of driving sales growth, which are profitable and sustainable. So I always look at the orange line. Pre-pandemic 3-4-2, EBITDA, last financial year 6-9. And what the team is set up to do in the years ahead, is to maintain that level of profitability sustainably year after year. Not too quickly, not too slow, sustainably. And that profitability which is best in class certainly in the UK and in Europe outside of apparel gives me the confidence that the business is actually maintaining a high degree of operational and commercial discipline. When I look at that chart, actually I never look at the history. I visualize that chart 10 years from now in my head. And that's actually how the business thinks about it. So when I look in 10 years from now, yeah, the blue line will have its upward trajectory but what matters to me is a consistency of the orange line okay and that's an important point that will continue to come repeatedly which is around the discipline of how we grow and what underpins that profitable growth quite boring slide you've seen it before Three planks, BNM UK, Heron, France. The three businesses doing well. We're going to keep driving the existing asset base profitably with high discipline, serving customers in the way we do, EDLP, EDLC. And we're going to grow space confidently but with discipline. Not too slow, not too fast. I'll come back to some of the details. Mike, all yours.

Thanks, Alex. Morning, everybody. So, before I step into the numbers, it's worth reiterating what we see as being absolutely critical in the business from a financial perspective. Four areas. disciplined in driving profitable, sustainable growth. Alex has just said it. For us, that means the growth is volume-led, not inflation, and it's coming from like-for-likes and it's coming from new stores. We see that long-term potential as being very significant. We see the opportunity in all our markets as being large. But attached to that growth focus is the relentless control of our operating costs, so that we keep our customer value proposition as sharp as ever, and we retain our high profit margins. And you'll see that as we come on to our 2024 numbers. Secondly, we've got cash discipline. We're keeping our stock buys tight, exiting each season clean, and we're maintaining our capital light investment base as well. Thirdly, we're going to operate with a robust balance sheet. Given the large value creation opportunity from the operating strategy, We intend to keep long-dated debt maturities in place, and we're retaining our financial flexibility. And finally, but critically, bringing those three points together, that will mean that we will grow our cash generation and our cash returns to shareholders in line with our capital allocation policy. So moving straight on to an overview of the P&L. It's a straightforward and strong picture. Revenue up 10.1%, all three businesses growing strongly, excluding the extra 53rd week, revenue growth still remains strong at 7.8%. Adjusted EBITDA, as we previously guided, it's confirmed at 629 million, which is growth of 9.7% in the year and means our profit margins have been maintained. And our cash generation has meant that our leverage ratios have fallen to beneath 1.2 times. So moving into the detail revenues, first page shows total growth. As I'll come back to, I think that's the primary growth metric for our group. BNM UK, total growth of 8.5%, balanced between 3.7% contribution from like-for-likes and 2.6% contribution from new stores with the balance of the numbers coming from the extra week of trading across the year. We opened 47 new B&M UK stores across the whole financial year, which increased average space in the estate by 700,000 square feet. The sales densities the new space is delivering are strong. The fact that space has grown by around 5% compared to the 2.6% sales growth contribution of that new space purely reflects the timing of the openings and that's giving us momentum as we go into the 2025 financial year. Vance and Heron, revenue growth again speaks for themselves. Both have high single-digit-like lights underpinning those total revenue growths as well. But finally, importantly, customer transaction numbers we always talk about. They're once again positive for each of the three businesses across the whole year. So breaking down our UK performance by quarter, you can see why the performance is best judged over longer time periods given calendar effects, prior year comparatives. at impacts on short-term numbers. More importantly here, though, we saw growth in both FMCG and general merchandise in the UK, with sales participation between the two categories remaining firmly in balance. Also to note, you can see that sales benefit from the new stores increasing quarter by quarter, and it actually represented over half of the total growth, excluding timing effects, in the fourth quarter. The gross margin, couple of points. Firstly, second half margin, higher than the first as is seasonally usual with the benefit of golden quarter. Secondly, UK trading margin across the year up to 46 bps. Importantly, you need to note that the value proposition for our customers is unchanged year on year. The improvement comes from discipline in our stock buys leading to a clean sell-through with only planned markdowns in the year. So that's a particularly noticeable effect if you look at the first half performance year on year, and that's where the improvement has been driven. On adjusted EBITDAs, I will just focus on margins generated. UK, up from 12.4% to 12.6%, driven by the gross profit margins, but also control of operating costs. Particularly important to note is that despite facing a 9.7% increase in the UK minimum wage and also more than a doubling in the number of UK store openings, meaning we are experiencing higher pre-opening costs, we've been able to drive that improvement in margins. France, underlying margins up 60 basis points to 9.1%. I say underlying, we're excluding in the prior year one-off government post-COVID support. And I think that shows the good progress we're making in the year. It's another step towards the French profit margins reaching double digits. Heron, 6.4%, once again, sector leading. Group margins, as a reported total, are flat, primarily due to the one-off French income and also the increase in the corporate segment costs. Underlying operating costs on the next slide. As per our plan entering the year, the significant work on productivity, our everyday low-cost discipline, has meant that our operating costs, the percentage of the revenues, has reduced for each fascia, and it has also reduced for the group, despite the 9.7% UK minimum wage rise. As we look forward, at 2025, the operating cost challenge isn't changing. Again, we're facing a large increase, 9.8% increase in UK minimum wages, also 6.7% increase in UK property rate charges. Our approach, however, is going to remain exactly the same as last year, using productivity, volume growth that we're delivering, as well as year-on-year favourable hedged currency rates and stock imports to offset any cost increases. We continue to stand behind our guidance, BNM UK margins being delivered in a range of 12% to 13%. and the same continuation of the guidance of France and Heron. So, slide 15. You heard me earlier emphasising the importance of total volume growth as being critical in our story. This slide works to explain why that is our focus. First point to say is that we've got structurally sustainable high profit margins in the UK of 12% to 13%. underpinned by the sales density and our everyday low-cost approach. Secondly, as you can see from the illustrative chart, we're relatively indifferent as to whether that growth comes from new stores or from like-the-likes. Either form of growth, like-the-likes or new stores, is meaningfully accretive to that overall operating profit margin, given our discipline on store fixed costs, and furthermore, As our profit margins are high, the proportionate difference between like-for-likes and new stores is small. And thirdly, of course, this means that our business revenue growth is now diversified very clearly across three elements. It's market size growth, it's market share growth, and it's finally acquisition of new space as well. So changing topics. Moving on to cash generation on slide 16. We've returned this year to a normal seasonal trading cash flow pattern, very similar to what we saw pre-pandemic. As we reported previously, in the first half, we saw a modest working capital outflow as we built up stock to trade the golden quarter. That has fully reversed through to the end of the 52nd week. We're clearly reporting on a 53-week basis, so there's a small £8 million outflow to the financial year as a whole due to a much greater tax payment being made than the £8 million in the 53rd week. Previous financial years, that would have been in week one. With the calendar effect, it's now appearing in week 53, and that's just prompting that small change that you see there. Our capex approach has been disciplined, focused on new stores that drive proven returns alongside spending on appropriate maintenance. A £25 million increase in total capex compared to a £26 million increase in new store spend shows the discipline to our investment profile. And with that discipline, you see once again our cash generation has been outstanding, leading to a post-tax, post-financing cost, pre-cash flow of £382 million. So we're therefore proposing a 9.6 pence per share final dividend with the total dividend for the full financial year of 14.7 pence. Once again, it's calculated at the upper end of our 30 to 40% post-tax adjusted profit number. And so to conclude with a reminder of the bigger picture. Since IPO, we've consistently grown revenues we've grown cash profits, we've grown our profit margin, and that has driven our operating cash generation. We're doing this through the discipline of the operating model and the strategy, and our long-term approach and ambition on this is not going to change, simply put. So I'm going to hand back to Alex and the team to talk about our operations and strategy in more detail. Thank you.

The fear is that Mike makes it sound it's easy. It's not easy, guys. It's a lot of hard work in there. I'll be very sharp in here before I hand it over to Gareth. Very pleased with Wilco opening program. I don't have the exact number, but if you assume Q4 last year and Q1 this year with another four weeks to go. 52, 53 openings, guys? Guys, we've opened 52 shops or so. We'll have open in excess of 50 shops over two quarters. High quality, accretive, high availability, excellent teams. That's not easy. Yeah, so it's a testament of the work that Ian Pratt, property director, is sitting at the back. You will hear more from Ian in November, and the retail team have done. That's a hell of a momentum, the business I had in the opening program, and we haven't compromised a single site. You know we went for 51 shops at Wilco, not 70, not 100. Every single list really negotiated and opening actually in good shape. Plan is well underpinned. Front end, nothing else to say. Harrow on the left-hand side is the next Wilco. Monk's Cross on the right-hand side. Standard. There is no difference. They're great shops. Don't make assumptions one is bigger, one is lower. They're absolutely indistinguishable. They're high-quality assets. They are highly accretive businesses, and they are all performing well. A couple of messages before getting into operations. If I look at the last 12 months, what is the best customer impact positive we've had in the business? Availability on-shelf has been second to none. I have walked, guys, at least through 200 to 250 competitors over the last 12 months myself when I see our shops. We don't do gaps on shelves. It's all around having high availability, 10,000 SKUs, FMCG and general emerge, 24,7365. Gareth and I and John and supply chain obsessed about it. That is the number one element that underpins the offer to our customer. EDLP is a given. We don't do gimmicks. EDLC is a given. This is actually how we serve customers. Come in and we're going to please you always with full shelves. On the right-hand side, we've dialed the price point aggressively on general merchandise, performing very well. Simply is performing very nicely across several subcategories. And what I'm going to say is that over the next few weeks, we're going to dial up our posture of aggressiveness on general merchandise. to continue to take market share. Posture of aggressiveness means the right stock, the right price point, no margin dilution because we are buying well, but the posture of the business is going to be even more aggressive and confident on the general merchandise because we are taking share in this business and in volume. Prices have come down. They are very aggressive and they will continue to come down as we continue to pass the right savings in the right SKU in the right subcategory. So when we take stock in November, remember what I'm saying, our posture in general merchandise is going to be even more aggressive to build on the volume we have delivered positive in FY20 call. Supply chain, you heard me, sorry. Availability is rock solid. It's what we call the triangle. It's buying. It's shops. It's logistics. And we continue to hammer that every single day in every shop. Gareth, I'm going to pass it to you. Short and sharp on operations. Why don't you tell the guys, when you join the business, how many shops in B&M have? Seven. So these guys have seen 700 times. 43 shops in his tenure. Go ahead. I've talked to you through the retail approach before. So rather than talking through the slides, I thought I'd just talk around the way we do it rather than what's on the slide. So the first thing to point out is my team has a relentless focus on customer standards and on retail standards. And the way we get about it is very simple. It's high visibility from the senior retail team. And it sounds really obvious, but as a senior retail team, we spend our life in shops. We don't spend our life in strategy meetings, taking time out. We spend our life in shops seeing what the customer sees. That is really important. So our store managers see us in the trenches working with them. We also give our store managers license to trade and what that means as an output of that is we sweat our space really hard. We trade every part of the floor and we let them trade through as hard as they can and we get the best return possible from our stores. And to do that we have to keep it simple. Alex mentioned it before, we absolutely focus on the core part of the business. That's our obsessiveness around driving sales and keeping consistent standards. The retail distribution buying collaboration triangle that Alex referred to and John will refer to is key to making sure that our focus on core and availability so that we can keep our shelves full and keep our mouth simple is absolutely fundamental to the DNA of the way we run the business. To finish off, I think there's three things that I would want to leave you with from the retail team outward. Firstly is, despite the fact that we've raised our expectations hugely from what our stores have delivered over the past two months, we have a really healthy culture. And no one should be under any illusion that running a shop well is hard work. It's 24-7, it's 365, and you have to be absolutely obsessive about everything that everybody does. Despite our raised expectations, an interesting number is our retail labour turnover is 600 bits better now than it was two years ago, because people generally take more pride in the shop and the environment that they operate in. The other point I'd leave you with is consistency. Consistency across the shop and consistency across the stage, whether you're in Penzance or whether you're in Wick. And the reason we get that is because our store managers and our stores seem to work for the right reasons and deliver for the customer. They work hard for each other, they work hard for the customer. And interestingly, I give an update to my colleagues at senior level two or three times a week, and the only update I ever give on what is the customer lens, what does the customer see, and what are the two or three loose ends that we all need to tighten up to make sure that customer journey is where we want it to be. And then lastly, I just wanted to talk about the continuous sustainable improvement that we've made. The first time I spoke to you, Two years ago, I think I've studied and I've talked about seven out of 10. Very quickly, we moved to seven and a half out of 10. And now the benchmark is eight out of 10 and nothing less is acceptable. So they are the key pillars that we pin our delivery on and our obsession about standards. And I'll be around if you want to talk to me after. I'm going to hand over to Jonathan.

Thanks Gareth. Morning all. Short and sharp from me today because we're looking forward to welcoming a number of you to our Bedford DC on Monday coming. So just in terms of a reminder, overview, our core purpose in the B&M supply chain is all about serving our customers better than anyone else. And what that really means is a continued improvement and alignment with buying and retail. Referenced a couple of times already. in terms of what we call the triangle. Why? Absolutely the purpose is to drive world-class on-shelf availability. And we've been focusing on, in the supply chain, real efficient and disciplined capacity for our buyers to grow their departments, of course, and categories, and importantly, to support what Alex was talking about earlier on, the ongoing and future rollout of the new store program, let alone the core stores that we've got to continue driving like-for-like growth. And what that is driving in the supply chain is record volumes. So we are now delivering record volumes year on year as a result of all of the above. From a stability point of view, our approach is all based on the brilliant basics operating process program. And that is about standardizing all operational processes and executing them brilliantly always. So what is it doing? Record volumes, record throughput with a more efficient DC and transport set of operations than they've ever been. The way we measure that is through our 5C program. And we are going to highlight today some of the solid progress that we're making. But just start with compliance. We always start first and foremost with compliance, the most important thing that we do. There's a real step on in working practices year on year, and we're seeing a significant reduction in serious incidents and riddles. In fact, 50% or better across the network, which is really encouraging. From a customer point of view, it's that increased stock accuracy through the network, and of course, driving improvements in delivery performance in on-time for stores, on-time in full. And again, what's that doing? Well, of course, it's driving improvement in on-shelf availability. throughout the supply chain, which is encouraging. There's been quite a lot of reference today in terms of cost. Of course, the real lifeblood of a supply chain and a logistics network, really important to us. And through our We Operate for Less program, we're really driving down EDLC, that everyday low cost, which is allowing the business to reinvest in everyday low price and get that flywheel turning in the right direction. It's allowed us to lower our percent to sales year on year, And it's enabled us to mitigate those inflationary headwinds that Mike talked about earlier on. And we're doing that to really improve productivity in every site, in every transport operation. From a capacity point of view, some highlights here. We've got improved network modeling now. That's really optimizing, ensuring that we're serving the right stores from the right DCs. And it absolutely enabled us to exit one of the legacy DCs whilst recording higher throughput and volumes. And then sort of the final C in terms of a thread that goes through things, how we do things. We've got established now a real clear productivity and service culture with the colleagues on the ground. Driving down labor turnover absenteeism year on year by over 25%, which we're really encouraged by. So in summary, we're making good disciplined progress in the supply chain and the logistics network. It's really enabling us to support the growth of the business, the new store program, and also obviously the categories and departments. And we're doing that with real improved volume, throughput, through absolutely more efficient transport and DC operations. Thanks for listening. I'm looking forward to seeing a number of you in Bedford on Monday.

Good morning all. So an overview of where we stand in France. So first of all, this slide describes The growth of the last few years, and you can see on the graph that the growth is very much based on the growth of FMCG, with a core being home products. So home products are very much based on the success of the formula from the UK and the success of the product selection that we enjoy from the UK teams, with, of course, an adaptation for the French market. And our focus is clearly to keep growing in FMCG and become in FMCG a destination and not only being a destination for home products as it is today. I remind you we've been voted for the third time in a row, third year in a row, the best chain in France for home decoration. So this is a very good recognition from the customers that the home is really strong. But we want to become as well a destination for FNCC. So this is core in our proposition strategy. Second point is, of course, a very strong focus, a very, very strong focus on retail standards. And here, basically, the majority of our work, like Gareth just said before, is around people, so people management. course but also training in order to achieve the best best-in-class position in the french market in terms of uh customer experience product availability and merchandise best-in-class merchandising and pricing message in the store uh and and and that is very key for us because uh you know we're coming from a state originally where the stores were not to the best level we could, and we continually manage that with having insight what the UK manages to do on the retail operation side. So this is for us a key focus, categories and store standards. In terms of expansion, new stores, so we're very pleased with the openings we had In last financial years that last financial year excuse me. We open 11 stores in France very good stores Very pleased about about them six of them are in the Paris region Also, we started to decrease our average space towards 2,000 square meters Okay And then the focus now is really on expanding the network on a very forming formula on lower square meters. So this year we will try more stores in the range of 1,500 square meters to 2,000 square meters with the intent of increasing the sales density and a better operating model with more efficient stock turn and turnoff. So that's it for France. I leave the floor to you, Alex.

Thanks, Andre. By the way, Anthony's comment on store sizes is just consistent with the UK. I think it's part of the learning and optimization, which is good. Accelerate sites as well, which is good. A couple of messages and then we go into Q&A. High quality of earnings, FY24, we haven't cut any corners. Store standards where they need to be, pricing where it needs to be, cost tight, cash discipline, we don't cut any corners. We don't have empty shelves. We don't inflate LFLs through pricing. Quality of earnings, that translates into cash. That's kind of point number one. EDLP, EDLC, that's the bedrock of the business. discipline. We'll continue to operate the business 24-7, 365, three businesses, B&M UK, France and Heron, with discipline. This is a small, very high-quality team. We all work together on a daily basis. The cross-fertilization of the senior team is daily. We are a non-bureaucratic business. I don't know why they're wearing a suit, but they normally don't wear a suit in the office, which is important. We're not a corporate machine. We connect with our stores one-to-one, and the business actually will continue to do what it does. When we get to have one mic, we'll do exactly what we did last year when we issued our one results. We'll have one season behind us, spring-summer. We'll give you a very narrow range for the full year, like we did in November. business as usual. Q&A.

John from Pritchard at Pilhen. Heron is something you haven't talked about this morning. Could you just tell us a little bit about the evolution of the range? I think that's been moving away from sort of traditional trees and stems a little bit.

So I'm struggling to, if you could speak a bit.

Sorry, just Heron really, the evolution of the product range, just a little bit on that. Then on Wilco, you've had a little bit of a pause perhaps in non-Wilco openings. That's not a criticism, it's just how it is. But do you think you can get your mojo back from that perspective to keep going with the opening programme now that when the Wilcos are all done? And carrying on from that, you've talked about very high, even higher than normal sales entities at Wilcos. Is that a quirk of taking on that Wilco space? would you expect that the class of ht25 and fy26 you'll also be able to say the same about very high sales densities of new space when you revert back to non-world current briefings thank you jonathan question one heron the three chambers as we called it ambient frozen and chilled performing well um

Heron has a very strong managing director under Tony Dobbs. He's been 25 years in the business. Heron now writes to Tony. Heron reports to John. I made that change one year ago. John and Tony work very closely together. I think the business is trading well. Each EBITDA margin is world class. I think Heron is the closest equivalent you have to a grocer in terms of our portfolio. Ambient, performing very well. The price point is good. We trade clearance very aggressively. I think the business is nicely set up. I will make sure that we give you an update in November. But the reason why I haven't had an update for the last year is because actually it's going well. There is not much to say. Let's keep the business delivering. 24 per annum, world-class EBITDA margin. Very good operator on Tony. Your second question. We have a good opening program in the current year. I've said publicly, not less than 45. It's well underpinned. We've opened more than 50 shops in 26 weeks. The business will continue the discipline and openings. I think the important point I would make is that I don't open a single suboptimal shop. None. And of the ones that we have opened, gareth has said it i'm very comfortable with the performance of those shops we take one year at a time you know that my commitment i said it two years ago was to rebuild the run rate to 45 openings we've already done that we'll keep cracking on but opening 50 shops in 26 weeks guys it's not easy so my responsibility is to make sure that we open the high each store high quality and never compromise the culture yeah so the pipeline is very strong Ian Pratt sitting in the corner he will give us an update in November how many years in the business here 10 years this Ian symbolizes EDLC in property knows the market inside out it's the same property team I sit with these guys every week we have a good pipeline coming in okay next question if people can introduce themselves as well. And we are taking questions online as well. And if I can actually, it would be easier to just ask one or two questions, guys, so we give the chance to the floor where it's, I don't know where this history of three questions come, but for your results presentation, nothing personal, Jonathan, it's just, go ahead. Two, one out. Thank you. It's Richard Chamber from RBC. I'll just ask a follow-up then on Wilco. What have you guys sort of learned from the opening program there that may be applied to the rest of the estate? Is there anything to say there in terms of... I'll answer before you confuse me with a second question. Okay. Paint, DIY, booming. Absolutely booming on volumes. We retrofit that to a core chain. Second learning? One learning? Gareth? Those units. were always fundamentally good traded in the right way so the answer is yes we retrofit without disclosing competitive info i think we're getting better at tweaking and optimizing the site specific range grading relative to the local competition but if i were to highlight diy paint stationary booming. We're taking share in volume and space. On the French business, how are they giving an update on how the sort of ranges are evolving for FMCG and how much sort of weight that's going to be? Complicated question. How many SKUs do you have and how much FMCG, how many you're going to increase?

We now have 2,400 SKUs. and we will rapidly reach 3,000 SKUs.

So with gradual, Richard, steady, and the beautiful of this, and you've heard me before, at least three quarters of the LFL in France is LFL transaction numbers, customer count. So it's actually working the way it should. It's fruitful through the shop, and that helps with the conversions of the densities. James answered two questions. The first one, I appreciate that you're giving a current trading update today. I appreciate that BNM's long-term story and the weather by its nature is quite volatile. I'll answer the question straight away because I know what you're going to ask. So how tough has spring-summer been? Well, it's not been very sunny. We haven't had any heat waves. But without getting into Q1, what I can tell you is that we... plays a right by and we are not exposed on stock. I'm not going to say anything else. You can read whatever you choose to in between the lines. It's been a profitable so far.

And the second question, I think it's the first time you've been as specific as saying French margins should be over 10%. I just wonder if, is that feasible for this year or is that more of a long term?

No, I think it's a medium term. I was talking to work yesterday. Michael, I could turn around to Anthony and say deliver 10.5 tomorrow. I would screw up the business. I'll be greed. The guys will get to the right level, but it's all around the speed in which we embed in the culture. 100%. I'm not greedy. I'm consistent. Greed kills. Thank you. Warwick.

Morning, Warwick O'Kinds, BNP Paribas, Exxon. Two questions then. The first is, could you give us a little bit more colour about where you're dialling up the price intensity in general merchandise, any particular categories or sort of thought process behind that?

yes i'll be careful how i because i don't want to get into into into into a quarterly piece so it's more strategic i think it's a good question work um the simply range um that you can see in many home subcategories have worked exceptionally well so it reinforces at the entry level a very sharp price point it's all around the dollar pound where we trade, okay, the volumes we have seen over the last year, year and a half, and simply have been exceptional. That's what gives John Parry the confidence to say, I don't know if you heard that, and I think it's not a disclosure issue, he said our cost to her last year on logistics was, did you say lower? Okay. So what this guy has said is that the cost to serve sales percentage on logistics was lower year on year. That is despite an increase of minimum wage. You cannot do that without volume. So what we're going to do, whether it's paint, as an example, whether it's stationary, whether it's home, I think we're going, I think the phrase I'm using, I am dialing up the posture into next financial year to make it very uncomfortable to the competition. The buying process has been very slick from China. The volumes are there. And we're going to continue to give customers every reason to come and basically shop that volume. Look, the consumer in the UK and Europe is under pressure. It's been under pressure since 2007. I've said this before. It is our responsibility that we negotiate hard, maintain the dollar price point low, but that posture, which is consistent with our margin structure, all around dialing that entry price point to create that vertical circle. More to come. You might find it in shops in two or three months, but it's going to look fantastic. And that is really going to come to life, I would say, Q2. So the plan on Q2 is actually quite robust and aggressive. I'm ducking the question, but hopefully it just gives you enough colour.

The same question is on the Wilco storage state. I think the rollout has been better than your expectations. Does that change any opportunity for further store acquisitions from what were previously well-coached stores that have gone back to Nando's. Are there any marginal ones where you could pick up now that performance has been better than it used to be?

Could be. Could be. I think it was a very good deal. Gareth, I am happy with all of the sites. The property director keeps chipping at them. I think we made the right decision to go for 51, but there will always going to be a few more that come our way. But it's all around the pipeline and building that pipeline. So the answer is yes, but it's one by one work. Thank you. Just one follow-up to Warwick's question and then a second one. The first follow-up is To what extent, I think you're implying, but just want to understand a bit better, the dialing up on posture, to what extent this is driven by lower falling aggregate crisis in China? Lower what? Aggregate crisis from China, or is your sourcing getting even better? And is that something you continue to see into next year? Who knows? Yeah. Okay. Currently, that's what you're saying. Is Europe good? I think I was in a conference. I think it was in January, and I said publicly, we have good sourcing momentum, and that gives the business options. It's all around driving volume. It's all around driving the low price point, pound-dollar, and it's all around consistent at BNM UK with 12 to 13 EBITDA margins. specific to you or do you see like this capacity? I'm not going to answer that. I think you have to ask the competition. But what I'm saying is we're in good nick. The second one, I think last year you talked about benefiting the grocery side from trading down in terms of transactions. It was quite a number of comments you made. Is that something you see continuing this year? I'm not going to comment about this year. Let's see how they have trades. What I can elaborate is we will continue to keep that price point very sharp all around the customer experience and what we mean by standards internally, which is a triangle. And I think the judge in all of this, as always, when I look at the competition, I don't look at the like for like. The like for like doesn't tell me anything. I look at the bottom line. If a business has volume, there is bottom line. If there is no volume, there is no bottom line. So just... And it may be helpful, John, explain if you use logistics as an example. I've had this conversation with U.S. universities in the past. Bring to life why a logistics operation cannot be efficient without volume.

Well, I mean, quite simply put, more volume, better hit rate. What do we mean by better hit rate? The more we go to a pick face, we'll be picking two cases, not one. Ultimately, what does that mean? That means your productivity improves. Cycle is virtuous. So ultimately, volume wins on all costs. It improves productivity, it drives costs down, makes you more efficient.

Volume is the lifeblood of retail. LFLs are meaningless unless you look at units. We run this business on units, not on value. That's why he's able to leverage the cost, and that's actually why the business maintains its level of profitability. is all around volume and units casing throughput per day per peak phase. Thank you. Hi, Ben Hunt from Investec. More question about the second half gross margin.

We were talking about it earlier before the presentation, but could you give a bit more color on the levers or the dynamics of what's been going on?

You had some tailwinds, obviously, from the freight and FX. How much was that contributing in the second half? And given that it was a flat performance, what was working the other way? Because, I mean, the stock terms improved hugely.

The throughputs improved hugely. So why aren't we seeing, I don't know, perhaps more on the gross margin side?

Why should we? It's a strategic question. That's my question, yeah. And the answer to that, you can elaborate, Mike, is it's relative to a prior year comparative. So there is some of that. And we set up the prices... and the tone on how we traded at the right level of EDLP? No. Look, the team on a weekly, monthly, corporate basis will always be making operational commercial trade-offs at two department level. But fundamentally, this is a 12% to 13% EBITDA margin. The cost line will be kept tight. Pricing is non-negotiable. It's part of the moving bits. Mike, anything you want to add to that?

No, I think I... I sort of commented on it as part of the presentation, that for us, the gross margin improvement has been achieved without changing the customer value proposition. If anything, customers are getting better value because they are seeing those savings coming through in the numbers. And so we have consciously chosen to drive volumes, not to drive inflation within those numbers. The first half you look at was bad. was sort of a stronger step up because of the prior base and the fact that we were able to deliver that very clean stock sell-through that you saw coming through in our stock numbers across the first half.

Thank you. We'll take some questions online now. Alex, what role has marketing played in driving B&M's growth over the last year, and what are your marketing plans for the year ahead?

So we don't spend money. We are very aggressive on social, which is free. It's all around trend. Gareth and the team in retail have a very firm plan on social media, but we don't spend money on marketing. We create content and facilitate content, followers, influencers, customers, that creates some momentum. we're an EDLP business. The choice for me is simple. It's a pound that goes into a marketing campaign or it's a pound that goes into pricing. I put it into pricing. It's a point of belief. Marketing might work for other companies. I stick to EDLP. Okay. Do you have any plans to return to the debt capital markets near term?

Mike?

So, If you look across our debt structure, the absolute majority of the debt structure is dated out seven, eight years in maturity. So we've got very, very long-dated maturities in place, which we're very happy with, pleased about, given the interest rate environment we're in. I think we've got a small stub of about £150 million of July 25 notes, which we will deal with at the right moment in time. In the meantime, though, they're a very low cost and attractive source of financing. And we've got choices, ultimately. You know, we're a very strong business, very cash generative, very attractive to debt holders. And at the right moments in time, we'll extend the maturity on that remaining stuff.

The best thing the business and Mike and the team did last year was to push out duration. Yes, it has an interest. Interest rate is marketing what it is, but the fact that as a retailer, we have low gearing and long duration, that's absolutely critical. I don't buy short durations. I don't worry about interest rates in the short term. It's all around maturity. That's the best decision I can make. Okay. How did category performance in financial 24 influence the gross margin percentage and cash margins? The two, as Mike said, the two sides of the business were in balance. General merchandise and FMCG were fairly consistent, actually. And there is no mixed attrition from either. So it's actually all around performance on an equal basis. It was remarkably consistent last year. And I think I said publicly a few weeks ago, months ago, even When we exited Q4, general merchandise was on positive, which is good. Did you please explain the drop in H2 gross margin? I think Mike has already answered that. Anything else you want to say?

No, I mean, I think building on your answer to the previous question, Alex, I think if you look year on year in terms of trajectory on gross margin, I think where we've seen the step on year on year has been more on the general merchandise side because of the cleanliness of the sell-through on the spring, summer season last year.

And this is a key point that you've heard before. What is the determinant between 12% and 13% EBITDA margin? Is it two seasons maximum? If we have two good seasons, stock is in good shape, we shoot to the top end. If we have two bad seasons, we are at the lower end. It's actually maximum. That is the delta.

Are you seeing higher pressure on freight rates? Have you picked your freight rates for this year? We're in very good shape, that's all I would say.

Very good shape. Let's go back to the room. Any questions?

Thanks. Hi, Andy Wade from Jefferies. Mike, when you were talking, you had the slide up with the sort of drop-throughs. You said you're fairly agnostic whether like-for-likes come from stores or... Sorry, whether revenue growth comes from stores or from like-for-like. I mean, is that really genuinely how you feel about it? Because one of them is clearly going to be considerably higher margin than the other one. If I could offer you 20% like-for-likes or 20% stores... I'll answer that question.

What Mike meant is... in terms of the economics and the unit economics of the business. The business will always drive on a yearly basis positive LFL. Always. And we'll make sure that that space is accretive. But what underpins the P&L is not the value on the LFL, it's the units sitting underneath the value. So we obsess about volume and units. A 3% positive LFL, illustratively, with volume decline, is an infinitely inferior currency than a flat LFL that is driven by volume, for the reasons we have discussed. I will never judge the business on an LFL basis. It's the units that underpin the LFL.

And Andy, I'll build on Alex's point with one more element. I think the other important difference between new space growth versus like-for-like growth is that the new space growth is an element that you absolutely can control, can target to be at absolutely the right pace of growth. And so I think critically, when you're looking at both categories of growth, they're both secretive to the overall profit margins for the business because of the volume effects we talk about. But then building on that, yes, of course, like-for-like margin is more accretive. Like-for-like drop-throughs are more accretive. But the proportionate difference between the two is actually smaller than you will see in many businesses in the industry because we've got those high profit margins that are sustainable, that are structurally high.

And very low operational hearings.

Understood. Albeit, you do have to invest capital to get there. Correct, of course. Okay, the second question, I appreciate it's going to sound like a slightly silly question given your focus on volumes and so on, but this year, given the price investments you've talked to, are we going to be looking at a year where price is a drag on the reported like-for-like number?

I think it's totally to call that we plan for a positive LFL. We'll give you a full guidance. We're going to be very competitive and the team has a very clear challenge on how they buy.

Okay. Hello. It's Isabel D'Aguerva from Morgan Stanley. I have a few questions. I wanted to go back to the point on turning up the dialogue on competitiveness in general merch. So just to clarify, why is now the right time? Is it because you're seeing more pressure from the competition or maybe you have some idiosyncratic... I sense the competition is very weak.

I sense the competition is very weak. I'm not going to name any. I'm talking about general merchandise. I sense the competition is weak and I have sufficient volume momentum on the buy process to dial it up. Don't read too much into it. I'm not talking about margins. I'm not talking about... I'm just saying... We're going to dial up the posture on general merchandise because I think it's going to be an opportunity. So go back three years. If you go back three years, the naysayers were saying, well, the margins of this business are going to collapse because actually general merchandise is going to come off. It's the opposite. The general merchandise out of this business is in very good health.

Okay. So you think now is the right time to attack?

I'm not saying attack. Those are your words. I'm just dialing the posture in Q2. That's all.

Okay, thank you. And then my second question is longer term. It's on the topic of retail media. On retail? Retail media. I wanted to get your thoughts on this.

Sorry, I didn't read. Media, okay.

Yeah. I wanted to get your thoughts on this, particularly as we think longer term. Do you think this is something which could affect your relative price gaps?

No. So a good question. So when we think about it, we obsess about the core business. Core business is EDLP, EDLC, discipline on how we grow, and we don't overlay beats. We don't play on online, we don't play on click and collect. If I flip the question on its head, the higher a competitor dials up the narrative on retail media, I suspect what it's telling me is that they are actually suffering from volumes. Their P&L structure is moving away from a shop. So for us, not interested. Thank you. Thank you.

Another online question, Alex. Congrats on the great results. Two questions. Firstly, you mentioned you're taking market share in the UK.

Do you have a measure of how much market share you are taking and who you are taking this from? Yes, but I'm not going to tell them whom would be inappropriate.

Secondly, for BNM UK, what actions have you implemented to drive down the labour turnover stroke absenteeism so considerably year on year?

Gareth, half a minute answer. It was two years, but the number of quotes is not one. It's around engagements, It's around taking pride in the job that we deliver and clear career paths and succession. But you don't open 50 shops without a good career succession and pipeline through. That would be the reason. What I would add to that is it actually comes down to the shop. If you guys walk through a competition, And you see some of the extremities we're seeing on poor retail standards. I need for you to decide who have them. Why would an hourly colleague want to work or take any pride in a shop that actually it starts from hours, it starts from price? I think it's a very human piece, which is everybody enjoys working in a good shop. And I have said publicly, several times, in my view, the only two retailers in the UK over the last two years that have consistently and relentlessly driving standards are only two. It's B&M and Martin Spencer's. Good stuff. And I am on record in that.

So effectively, you're saying there's a second derivative of upgrading the store managers. It then feeds into... Of course.

Probably have time for two more questions, Dave, in total. Yeah, okay. I'll ask one more from here.

Could you please speak about your existing store volume? What level is it relative to before the pandemic and any updates on trading trends during 2025?

I'm not going to answer that.

Sorry, the volumes compared to pre-pandemic, you can give some... Considerably higher. Considerably higher. For sure. The best sign of the health of pre- and post-pandemic, you've seen the sales density is accretion. It's actually the two sides of the business, General Merchant and FMCG, the two boats have been lifted consistently, which is, for me, the health of the business. Probably have time for one more in the room.

Sorry, just one more. Probably a bit of an unfair question, but if we look at your peers across in Europe, they seem to be seeing pretty strong, like, lights and stuff, but this is actually true. Is there any structural reason as to why they're still seeing that momentum? Is this your opportunity in Europe, or do you see there's a reason for it?

I learned from the US. You've heard me that before. I prefer to learn from Costco, Walmart, and Home Depot. Good business, highly complementary. They have a different business model. Good for them. Okay, thank you. Thank you, everybody, for coming. Thank you.