B&M European Value Retail (BME) H2 2023 earnings summary

Executive summary

• Revenue increased 6.6% YoY to £4,983m, 30.7% above FY20; adjusted EBITDA was £573m, 11.5% of sales, toward the top end of guidance.

• Cash generated from operations was £866m; net debt was £724m and leverage remained 1.3x.

• FY24 adjusted EBITDA is expected to exceed FY23, with growth across all three businesses.

Financial highlights

• Revenue £4,983m, up 6.6% YoY; gross profit £1,801m, up 2.7%, with gross margin down 137 bps to 36.1%.

• Adjusted EBITDA £573m, down 7.4% YoY; margin declined 174 bps to 11.5%.

• Operating costs rose 8.3% to £1,228m; depreciation and amortisation was £76m, up 16.3%, and net interest was £29m, up 31.0%.

• Adjusted profit before tax was £459m, down 12.6%; statutory PBT was £436m, down 17.0%.

• Adjusted diluted EPS was 36.5p, down 12.3%; statutory diluted EPS was 34.7p, down 17.5%.

Outlook and guidance

• FY24 adjusted EBITDA expected to be higher than FY23 across all three businesses; underlying sales and margin structure described as sustainably above FY20 levels.

• In the first 9 weeks of FY24, B&M UK LFL sales grew 8.3%; France and Heron Foods maintained trading momentum.

• FY24 gross new store openings expected at ~30 B&M UK, 20 Heron Foods and 10 B&M France stores.

• Strategy remains focused on EDLP pricing, limited assortment, a low-cost operating model and operational excellence.