B&M European Value Retail S.A.

Good morning, everybody. I hope you're all well. Welcome to B&M's full year results presentation for 2025. Today, we're covering our performance through the 52 weeks ending 29th of March. I'm Mike Schmidt, the group CFO, and I'll be leading the presentation today. Joining me, three familiar faces, Gareth Bilton, our buying director. Almost got that wrong. Moved on. John Parry, our Supply Chain Director, and James Kew, our Retail Director. Today's presentation clearly is all about the results for 2025. There's clearly been challenges that we faced, but we're addressing those in the short term and we'll talk about that. And ultimately, the presentation today is also about the resilient performance that we've delivered for the full year and how our investment case for the business continues to be attractive. I should say up front that we're also looking forward to Church Yegan joining as CEO in just a couple of weeks' time, and I know that he's very much looking forward to meeting all of you as well once he's had a chance to work through his induction. I should also mention up front that, as you may remember, 2024 was a 53-week financial year. As we go through the presentation for 2025's outturn, You will see, to help you assess the underlying progress that we've made, we show a 52-week prior year comparison where that's the most appropriate thing to do. So, just starting off with a bit of a summary. Overall, in 2025, the disappointing like-for-like sales that we saw actually translated into resilient profit delivery and continued total revenue growth. Looking at the headline shape of the announcement, revenues reached £5.6 billion, which was up 3.7% year on year. This growth was primarily driven by the new stores across the group contributing well. The UK Like for Like performance stemmed from both the challenging market environment and also our own execution. We'll discuss our reflections and action plan in more detail shortly. Our operating profit measure of group adjusted EBITDA before IFRS 16 was £620 million, which was up £4 million on the prior year. This is resilient given the negative like-for-likes. Our leverage ratio remains healthy at 1.26 times on a pre-IFRS 16 basis, and that means we're proposing a final dividend of 9.7 pence, which brings the full-year dividend up to 15 pence per share. That's an increase of 2% versus 2024. That means when you sort of step back, over the last five years, we've returned £2.1 billion of cash to shareholders. And actually, if you just look at the last three years, post-COVID, it's been £1 billion. To put that in context, that £1 billion is over one-third of our current market capitalisation today returned to shareholders in the last three years. And underpinning that payment, our cash generation this year was over £300 million once again. We're around 10% of our current market capitalisation. That stems from a group-adjusted return on capital employed that stands at a strong 30.4%. Finally, I should say the redomicile is progressing. The process is now focused on Jersey, and we expect it to complete within the calendar year. That's going to simplify processes internally. It'll reduce our operating costs. but it will also give us the flexibility to also return capital and drive compounding value creation through buybacks. So let's delve deeper into the financial performance. Slide six, looking at our summary profit and loss. Revenue and adjusted EBITDA I've already mentioned and I'll talk about later. And you can see then that the EBITDA we generated dropped through to a lower level of earnings per share of 33.5 pence relative to 35.9 pence last year. And that's due to the depreciation impact of a larger asset base and also the higher interest rates that now fully apply across our capital structure. We have, of course, extended all our debt maturities. So I expect the divergence between the operating profit and the EPS progression trends to now start to stabilise And importantly, I'd also repeat a second time, the point that our return on capital remains strong, above 30%. And this will continue to be a feature of the investment case for our business. Slide seven. Our chart here illustrates the year-on-year total revenue growth building up from 2024. Like-for-like sales, you can see is the big block there. decreased by £119 million, which was a 3.1% full year figure, negative like for like. With the underlying figures in Q4 continuing to be negative, at minus 1.8% of an underlying basis, we've got clear plans to address this in 2026, and some external factors clearly last year, such as no Easter falling within the year and the wet spring weather should not repeat. Our net new stores and relocations added £280 million net overall, driving the group number. Heron Foods saw a small decrease, while B&M France added £40 million of revenues. And that brings us up to our 2025 revenue total of £5.6 billion. Clearly, for us overall, the main challenge last year was the like-for-like performance. I'll set that aside for now, but I'll come back and talk about it in more detail. Our gross profit margin has shown resilience, increasing from 37.1% to 37.6% in 2025. BNM UK contributed an increase of 42 basis points to this, It's important to note here though that overall we've been reducing or holding flat prices over the period rather than increasing prices. The driver of the higher BNM UK gross profit margin was the mix between general merchandise and FMCG and also the mix within each of the categories within general merchandise as well towards higher margin segments. Where we saw factory gate price benefits, transport cost reductions, FX benefits, we passed those back to customers. And we've consciously driven ASP declines as much as 5% for home categories and 2-3% reductions in many other general merchandise categories. So the benefits on price and value that customers are getting are substantial. B&M France and Heron contributed the balance of performance. Again, the 10 basis points there really comes from the mix between France and Heron's relative growth. Adjusted EBITDA. So for BNM UK, adjusted EBITDA was stable at £545 million, with the lower like-for-like and increased operating costs being offset by the higher gross margins and the profits of the new stores coming through. BNM France, adjusted EBITDA increased by £2 million to £48 million, with the higher sales offsetting increased operating costs. And for Heron, adjusted EBITDA was £30 million, which is down from £35 million, resulting from the scale effects of lower revenues. And for the group overall, group profit performance was also supported by lower central costs and charges in the year. So now focusing on our underlying operating costs. For the group overall, operating costs increased by 7.2% year-on-year. B&M UK was clearly a large part of that, where we saw costs increased by 8% to £1.1 million. That was primarily driven due to the increased store estate that added 6.9% of additional sales. So the 8% underlying operating costs comparing with The store estate adding 6.9% of additional sales. But also, of course, B&M UK was managing higher volumes from the low average selling prices and the increase in the minimum wage of 9.8% last year. So significant cost headwinds that we were facing into and good management process there overall in the operating cost base. B&M France, underlying costs increased by 9.9% to £195 million. which was 36% of their sales. This reflects the volume growth and also elevated transport and distribution costs as we went through our warehouse management system upgrade. For Heron, operating costs increased by 3.1% to £144 million, which is 26.3% of sales. Like there, very tight cost control offsetting the large rise in national minimum wage within the business. So cash, we've got a very strong cash discipline in this business. You can see here the cash flow as an overview. EBITDA on an IFRS 16 basis, the statutory unadjusted number was £841 million for the year. The change in working capital was an outflow of £64 million, which is slightly larger than previously expected, but clearly that's a moment in time balance and affecting this was the timing of Easter being later meaning that we're stocking chocolate Easter eggs and also higher stock in transit as we manage the well-publicised shipping environment and tariff environment. Across the two years, working capital has risen by £71 million, which is a proportionate increase when you consider that we have added a total of 115 net stores to the estate across the group. After income tax paid, net capex and IFRS 16 lease payments, our post-tax free cash flow was 311 million pounds. Net debt to EBITDA, 1.26, is right at the midpoint of the conservative one to one and a half times range that we focus on. And capex was 111 million pounds, which was down from 2024's 124 million pounds. with lower spend on new stores, largely being down to the timing of payments, timing of works ongoing, and also slightly different sized footprints. The lowest spend on infrastructure, again, I think it's more phasing, in particular in the early part of the 2025 year, some energy efficiency spend programs that have been multi-year programs reached their natural end and had already rolled out across the full estate. Total capex excluding new stores as a percentage of our net sales was 1%, and that range you can see on the slide of 1% to 1.2% is a pretty consistent level that we've previously seen over time. So that covers the financial performance. Clearly, we had lower sales than we would have liked, but within that context, resilient profit number and good cash generation for the business. So I'll move on to the operating update. A few overall reflections on the year we've just had. Firstly, as mentioned already, addressing the like-for-like performance remains our key internal focus. We believe the underperformance stems both from the external factors, but also our in-store execution within the FMCG category, and also the general merchandise average selling price deflation. It's very important to split those two parts of the business as the causes are different and so are the fixes. Fundamentally though, we do believe that the challenges are fixable and the plans are being implemented. And if we look at the things that are working well for us, our new stores are performing as we'd expect, we continue to strengthen our supply chain infrastructure, John will talk about that, and most critically, the strong fundamentals of our business are unchanged. That is to say, we've got a good consumer proposition that should benefit from long-term global trends towards value and discount. We've got an advantage cost base that supports our everyday low pricing whilst keeping high profit margins. We've got a capital light asset base and that ultimately means we've got strong return on capital employed and cash returns to shareholders. Slide 14, going into more details the causes of the like-for-like trend. It's important to say upfront that what you see on this page is the like-for-like trend and clearly the total trends are different for both value and volume and we have seen growth on a total basis across both volume and value for FMCG and general merchandise. As I said on the prior slide, it's important to split and look at the performance separately between the two categories. On the FMCG side, we saw negative like-for-like performance on both value and volume across several categories within FMCG. The scale of the decline in value and volume was comparable. And notably, overall, we've been seeing, as you can see for yourselves, far less than the reported grocery inflation for the sector as a whole, which I think various sources have been called out to be 2% to 4%. Potentially, the lower level of inflation that we're seeing has been due to some of the limited categories that we operate in, but of course, it's also due to how we work in terms of keeping our price advantage to the sharpest players in the market. With price and stock availability having been in the right place, also on the FMCG side during 2025, we think the cause is more about the in-store execution, by which I really mean the space allocation, the presentation, the ranging. We've already implemented in-store actions in FMCG in the first quarter this year in order to drive like-for-like performance through growing our volumes. And Gareth is going to pick up some of the specifics on those actions in detail very shortly. On general merchandise, in contrast, we saw like-for-like volume growth. That's particularly important as the core profit driver for the group. We did, however, experience a decline in like-for-like value due to the lower average selling prices that resulted from better buying. That really was an active choice that we made to pass the benefits of our better buying on to customers. We think that's the role of a discounter. So we saw up to a 5% average selling price reduction in home categories, 2 or 3% in categories like toys, electrical, Christmas. Gareth's going to talk about our plans to drive average selling prices this year. Critical takeaway, though, for you is the point that the trends between the categories are different and the strategy to move forward is different. I'll now hand over to Gareth to explain this commercial approach further. However, I think Gareth will start by sharing some of the trends we've seen in our customer base that add some useful context.

Morning, everybody. I'm going to spend the next few minutes talking to you a little bit around FY25 performance, but predominantly around our customer and some of the FY26 actions from a trading perspective. So first of all, as Mike just alluded to, I want to talk about our customer. We talked before about our core customer sitting in that lower income bracket, and this slide brings that to life. The graph clearly shows that 65% of our customer base sits in that annual turnover credit bracket of 40K and below. Our product range is heavily geared towards this group and particularly from Q2 onwards last year. It's also worth noting that we've got broad appeal, and you can see that in Q4, in our general merchandise ranges, we saw the greatest market share gains in the 50 to 100K credit turnover profile, and that's a real indicator for us of customers trading down. This gives us both confidence that the actions we're taking around ASP are the right ones, and it gives us opportunity to grow revenue from a broader customer base. I'll talk more about that shortly. You probably also saw recently in the Times, the Mail and the Express, reporting on growing trends of celebrity shoppers, Molly May, Carrie and Boris Johnson, that's probably up there that are more memorable. So moving on from our customer to our customer mission, we've long maintained that we're not a grocer, and this slide brings that different proposition to life. In the grocers, shown on the pillar on the far left, Almost 87% of their sales are driven by FMCG. The discount grosses next to that, it's more profound than this at 94% and our closest major competitors at 77%. Our mix is 58% FMCG as trade drivers, which is much lower than the others and follows a very different profile. And a recent Cantor survey that we just have done shows that five of our top 10 footfall driving categories are in general merchandise. And if you were to exclude non-food and drink categories from that, that number rises to eight out of 10 categories for footfall driving. So our customers are far more likely to associate us with general merchandise than traditional FMCG. So on our price proposition, the graph that you can see there shows the YouGov price perception picture, and it shows that over the past five years, our value perception remains unchanged, and our price perception is better than both the grocers and our closest competitors. Despite increased market activity in recent times, particularly from the grocers, our price gap remains unchanged at 15% to 20% to the grocers, and that's on a post-loyalty basis. We measure price through a consistent methodology and we're confident in the outputs of our index. But for added assurance, we've enlisted the services of an external benchmarking business. This relationship is very much in its early stages, but the initial findings and outputs from their work supports our own internal results. And this partnership gives us additional capacity to both broaden our comparison basket and make that wider and analyse further the outputs in the coming weeks. In summary from price, our real value remains strong, our value perception remains strong, but communicating that value to our customers in a clear and consistent way with authority is a key objective for the coming weeks. Mike talked about FMCG actions, and I'll talk you through some of the key points. I think the first thing to call out is that James and his team over the last two to three weeks have lifted and shifted 145 customers thousand days across FMCG. It's a massive workload. But I'm going to talk you through some of the key touch points now. So firstly, in health and beauty. So we've undertaken a full reset in the visual merchandising standards. We've undergone SKU consolidation in that range to make the range easier to shop and more inspirational. We've added a trending products feature to make sure that the success and exposure we see on our social media channels around our product dupes and the real fashionable trending products are brought to life in store. We've also added a baby range in following a successful baby event earlier this year and the whole category's got an improved look and feel and improved shopability with brand signposts to help navigation by subcategory in the aisle. Moving on to cleaning, which is a category that's in our top three football driving categories, that's undergone wholesale change too. The most significant change here is a 25% to 30% increase in average per store in linear space. This has allowed us to grow the product groups where the market steps on, allowed us to give more exposure to our volume lines, And we know that our customers love cleaning. There's always newness in those categories and they're often supported by celebrity influencers. Mrs. Hinge, Vicky Patterson, Stacey Solomon as a few examples and they get great exposure from the brands and on our social channels. I think the key point here is us being brilliant this year at the categories that our customers love us for is a key step on. And food, food's not insignificant. This category's been relayed, it's been blocked. So we've got greater definition by subcategories and we've rationalised the SKU count in the range. We've also introduced value points of sale in our larger footprint stores. We've introduced incremental chillers. We believe that these actions will step on our FMCG performance both in our volume units and value sales for the year ahead. On general merchandise and price benchmarking, We've always said that price benchmarking general merchandise is more difficult than it is in FMCG. Often size, brand and qualities can skew the results, but we're very confident in our gap. Typically, our general merchandise gap is greater than it is in FMCG. We're at least 20% targeted against the industry benchmark. As Mike talked about, from Q2 last year, we proactively deflated our general merchandise price points through the mix of opening price point products in the range. Categories such as homewares, DIY, indoor furniture, pet accessories and household textiles. We actively drove a lower ASP, passing on the value to the customer. This lower ASP drove increased volumes at both total and like-for-like level, but it did impact our total sales value as a result. In FY26, we're taking steps to restore that ASP. But before I just talk about that, I think it's a really important point to make. I reiterate our core customer, 65% of them sit in that lower income bracket and those lower opening price points are crucial to our ranges. They drive volume and are targeted to the customers that love shopping with us on that treasure hunt mission. There's no plan to remove any of those lines from the ranges. But that said, we've got tremendous opportunity to enhance some of our ranges with higher price points at the other end of the range. By focusing more on good, better, best, we'll keep the value entry products that we know work well, and we'll complement them with brands and bigger, higher quality products that remix the pricing architecture that allow those customers that can't trade up to trade up into a more premium product. The important point to stress is our model is the same, though. We're a value retailer, and these incremental ranges still offer fantastic value for money, but in a different way into a broader customer base. coupled with a salt shift in our larger footprint stores to focus on sales and profit density from the unit versus skew density on shelf, where we've got good heritage in some of these categories, and our larger store footprint gives us a good platform to introduce them, enhance them into our ranges. So thanks for listening. I'm going to pass you over to John, who's going to talk to you about supply chains.

Thanks, Gareth. Morning, all. I want to talk to you about two key elements of how we continue to strengthen our supply chain. Firstly, the introduction of our new Ellesmere Port Import Centre. You'll see on the left of the screen there. So in support of our ongoing growth through new stores, we've just opened our new import centre this week and we'll continue to scale up to full strength across the next 10 to 12 months. The purpose of Ellesmere Port is to do a number of things. Firstly, provide efficient general merchandise stockholding capacity upstream. Also to enable a greater level of productivity and case throughput capacity in our broader DC network downstream. And clearly have an element of control over network SKU deployment and volume alignment, which clearly drives a better efficiency across the network. So in summary, the purpose is to provide stockholding capacity upstream and efficiency downstream. Secondly, I want to give you a brief update on how we continue to drive network productivity and efficiency, ultimately removing and reducing hours across both direct and indirect processes across the logistics network, whether that be warehouse or indeed transport operations. So over the last two to three years, we've been very focused on standardization across mainly our manual processes in both DC and transfer operations through our brilliant basics program with really strong results, which you will have heard me talk previously to you in some of these sessions. And in tandem with that, we've been implementing and will continue to implement our automation and technology strategy across the supply chain. For example, standardising processes with auto pallet wrappers and auto unloading of containers. Ellesmere Port at full strength will receive circa 75% of the total general merchandise container inbound volume. Through our new Unloading automation and automated pallet put-away process through automated guided vehicles known as AGVs, it will enable us to take a significant number of manual operating hours out in the inbound process and reduce costs significantly. It will also open up the door to automate the remaining 25% of container inbound across the broad EDC network as we implement automated unloading across the rest of the network. We've also been busy implementing a new payroll and workforce management system, which is enabling the management teams on the ground to monitor and manage hours control far more effectively, whether that be an absence management or indeed lateness to really drive an improvement in productivity in direct hours. We're also in the latter stages of implementing Microlize, a well-known transport system, which optimizes our transport operations, removing hours and miles from the road, in terms of the day-to-day transport plans. Finally, amongst other productivity improvement plans, we've also executed a new manual handling equipment fleet management system for our DC operations and the equipment inside, providing greater driver accountability and cost-saving benefit. So in summary, these are all proven, functional, tried and tested solutions, industry-wide, that will enable us to lower costs, provide more efficient capacity to support the business growth, whilst enabling improved flow of goods, resulting in better service to stores and customer availability. So thanks for listening. I'll now hand over to our Retail Director, James Kew, who's going to talk more about our stores.