B&M European Value Retail S.A.

Good day and thank you for standing by. Welcome to the BNM full year 2025 Q1 trading update conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please note that today's conference is being recorded. I would now like to have the conference over to speaker, Alex Russo, CEO. Please go ahead, Sal.

Thank you. Good morning, everyone. First of all, thank you for joining us. UK participants, very good morning. I'm sure there will be US investors on the call, so thank you for joining us early. And similarly, Asia, good afternoon. Thank you for joining us. I'm here in the room with Gareth Bilton. Many of you already know Gareth. Gareth is a retail director. You will hear from him during the call. Dave is also here. And Mike is joining us actually from the U.S. I think he's flying later today. He's on a family trip. So Mike will be on the call as well. Okay? So what I suggest we do, I will spend four or five minutes running through some of the finer points of detail on the RNS, and then we can open it up to questions. So I want to cover four buckets in no particular order. The first one is generally around trading, so sales performance. The second section is basically a gross margin and stock performance. The third bucket, always critical for us, is our price position. And the fourth element is really profitability in the quarter and how do I see the year ahead, okay? In no particular order. So if I start with trading performance in the quarter, so the overall context Total sales growth, 2.4%. So let me start with France, and then I will come back to BNM UK. So France has performed and traded actually very well in the quarter, almost double-digit LFL, and basically a total growth on a local currency basis. So I'm actually quite pleased with France. And let me give you a bit of context why. that business goes from strength to strength. You've never heard me in the past talk too much about IT work and investments, but over the last three to four years, we have basically done a lot of work at BNM UK. So basically, France has just successfully implemented during Q1 what we call internally WMS. That's a warehouse management system. We went through that process at BNM UK maybe five, six years ago. It's basically the same version. And that's probably as complex as IT implementations get. So France has finalized that in the quarter successfully. Fundamentally, warehouse management systems allow the whole peak productivity and growth potential of the business to go further. We have planned this for a number of months. and it's been implemented successfully, and I think that is part of the future runway that we see in France. It's probably, since I've been in the business, the most complex IT implementation we've done across the group, and I'm very pleased by the team, the way they have handled it, clearly with good coordination with BNM UK. The teams have worked well together, and it's basically the same system infrastructure we have in the UK. So that's a big tick that actually supports growth in France in the future. And the second element on France that gives me a lot of confidence, actually, the year ahead and thereafter, is that now we're well advanced in basically setting the second major distribution center in France. That basically should be opening at some point towards the end of next financial year, so not this financial year. All of that is included in the plans, but again, it's a confidence statement on how I see the volume throughput and the growth opening potential and performance we have in the business. So from my perspective, the guys, the team in France have had a good quarter. I'm pleased with that, and the plans continue to move at pace. B&M UK, look, I'm not going to expand on the weather. You have already heard about it, several competitors. It's been a challenging weather, no question about it. But what I can tell you, so what we did about B&M, about it before and during. So basically, we had an exceptional spring-summer last financial year, as you know. And frankly, we learned the lessons of two years ago when actually some of you will remember we simply were too heavy on garden outdoor furniture. So what we did this financial year, and we planned this maybe nine months ago, maybe up to 12, is that we de-risked the garden buy-in. So we were much more conservative. The simple reason for that is that we didn't want to bet on two exceptional spring summers. And I think what that means is that we basically exited Q1 clean. No margin risk, no markdown risk, and basically has allowed us to remove any downside on profitability on what has clearly been a challenging spring summer year. April was rough on rain, I think generally for everybody. May, you've heard the commentators. So that's, for me, a big tick. We anticipated this, and we have exited Q1. That means June clean. We're cleaner than one year ago, and that means that there is no margin risk despite the weather. That's BNMUK. That's never an issue, as you know, in France, because France is actually much less acceptable on weather. It's a warmer country, so gardening is never an issue in France. So with that context, and I'll come back to margin on a bit more detail, basically if you remove the calendar effects year on year, whether it's Easter, whether it's a coronation weekend, the way we see the underlying LSL at BNM UK has been roughly negative 3.5%. ballpark, if you were to remove the seasonal impact that we have had because of the weather, on an underlying basis, LFL at BNN UK would not be far off from flat in the quarter. And that's on top of a prior year base, which was the highest last year of plus 9.2%. So the dynamic in the quarter that gives me a lot of confidence is that, again, general merchandise has performed exceptionally well across the whole range. And just to give you some call of this, despite the weather impact, general merchandise was higher than 50% sales participation in the quarter. Despite that impact on garden, I think that is a very strong performance. If you remember what I said when we issued the prelims, I said we were going to basically... Dial up, tune up, our home categories basically starting YouTube. So let me give you some color because if you go to the shops right now, you can see that. And maybe a bit of context why home is important. It's actually the one category that has gone from strength to strength, I would say, in the last three to five years. Depending on the time of the year, across a whole range of home, so you know that we have 5,500 SKUs across a whole of general merchandise, home can flex, depending on the calendar, anywhere between 2,400 SKUs to up to 3,000 at the peak of the seasonal trading. So it's actually a bedrock on general merch. So you know we launch simply. a number of years ago, simply has continued to perform exceptionally well. And if you walk into one of our shops, and it will be the same in France, it's exactly the same range. We didn't have this last year. We've launched basically what we call EDV, everyday value. It cuts across several home categories. It also touches, for example, pet, some electricals. It's to the tune of 500 SKUs, exactly the same line items in France, exceptional value to the customer, and it continues with our confidence journey of trading general merchandise well on what I perceive is a market weakness. I don't see the competition on general merchandise particularly strong. You've heard me a few weeks, a couple of months ago, and we have backed that we planned this approximately a year ago. It's looking fantastic. We didn't have this one year ago, which makes the transition between Q1 and golden quarter even more confident in the way we give value to the customers. Before I hand over to Gareth to just give you a bit of color on how this looks in the shops, and you can read the same will be in France, it is not margin-valuative. It's actually excellent price point. It's accretive to the whole business and continues to strengthen the range of authority we give to the customers. So, Gareth, why don't you just spend maybe half a minute and just give the team some color. What's new? How is it looking in the shops? And why do you think this is something fundamentally different than one year ago?

Yeah, so the first thing to say about this event is it's incremental. We didn't have it last year, and it was introduced specifically to give us a second season between spring-summer ending and autumn-winter starting. So that's the first thing. The second thing around it is it plays to our strengths from what we know as simply as an opening price point in homewares. This builds on that and enhances our position as a value retailer in the price point. From a visual perspective, it's very impactful. It follows a model where it's in CDUs. It's very productivity friendly. It means that from a store operations and an EDLC perspective, it makes the transition swifter and easy to manage. And it also gives us something very visually to shout about externally to drive footfall in. So when it's landed on shelf now and you can go in stores and see it, you see bright, bold colors across a wide range of covers, all of our home departments at a real low opening price point which drives that value message through. Thank you, Gareth.