Preliminary Results Reveal B&M Sales Decline; New CEO Announced

• Strong execution consolidates sales and profit gains made during FY21

B&M European Value Retail S.A. ("the Group"), the UK's leading variety goods value retailer, today announces its Preliminary Results for the 52 weeks to 26 March 2022.  Due to the exceptional nature of the previous financial year, comparisons are also shown with regards to pre-pandemic levels of FY20 where relevant, to provide a more meaningful measure of performance. 

HIGHLIGHTS

• Group revenues decreased by (2.7)% on prior year to £4,673m (or (2.4)% at constant currency¹), but increased 22.5% on a two-year basis versus FY20
  
  
• B&M UK fascia² revenue decreased (4.1)% year-on-year, driven by one-year like-for-like³ ("LFL") revenue decline of (9.0)%   

          - On a two-year basis versus FY20, LFL revenues were up 13.0% with sales densities significantly higher than pre-pandemic levels due to retention of new customers

• Gross margin increased slightly year-on-year in the core B&M UK business, driven by strong performance across General Merchandise and a high sell-through rate on Seasonal ranges leading to limited markdown activity
  
  
• Group adjusted EBITDA⁴ (pre-IFRS16) of £619m (FY21: £626m) with an adjusted EBITDA⁴ margin of 13.2% (FY21: 13.0%), both slightly above consensus expectations

          - On a two-year basis versus FY20, Group adjusted EBITDA⁴ has increased 80.8%

• On a post-IFRS16 basis, Group adjusted EBITDA⁴ was £828m, representing an adjusted EBITDA⁴ margin of 17.7%
  
  
• Group statutory profit before tax remained flat at £525m with statutory diluted earnings per share 42.1p (FY21: 42.7p)
  
  
• 34 gross new B&M UK² store openings offset by 14 closures and relocations, with new store returns remaining very strong
  
  
• Excellent progress in France with all stores now under the B&M banner and an adjusted EBITDA⁴ of £32m (FY21: £11m), representing a margin of 9.2% (FY21: 3.6%)
  
  
• Group cash generated from operations of £598m (FY21: £944m), reflecting the strong EBITDA outturn and investment in working capital to ensure availability of Spring/Summer 2022 seasonal stock
  
  
• Year-end net debt⁵  of £790m, with a net debt⁵ to adjusted EBITDA⁴ leverage ratio (pre-IFRS16) of 1.3x (FY21: 0.8x), comfortably within our stated leverage ceiling of 2.25x
  
  
• Recommended final dividend⁶ of 11.5p per share (FY21: 13.0p), bringing the full year ordinary dividend to 16.5p per share (FY21: 17.3p) in addition to the £250m special dividend⁶ paid in January 2022.
  
  
• Alex Russo, currently CFO, announced as successor to Simon Arora as CEO

Financial Results 

Simon Arora, Chief Executive, said,

"I am very pleased with the results we have delivered.  The strength and resilience of our business model has enabled us to execute our plans well and continue offering compelling value for money to customers.  As a result, we have sustained the step up in sales and profit compared to pre-pandemic levels.  To all colleagues across the Group who helped make that happen, I extend my sincere thanks. 

The retail industry is facing inflationary pressures whilst our customers are having to cope with a significant increase in the cost of living, making spending behaviour in the year ahead difficult to predict. However, we have seen before that during such times customers will increasingly seek out value for money, and B&M is ideally placed to serve those needs.  As such, we are well positioned to support the communities in which we trade and continue our long-term growth strategy." 

CEO Announcement

Following the announcement on 22 April 2022 that Simon Arora intends to retire as Chief Executive Officer in 12 months from that date, B&M European Value Retail S.A. is pleased to announce the appointment of Alex Russo as his successor.  Alex is currently Chief Financial Officer of the Group and will succeed Simon on a date to be confirmed in due course. 

The appointment of Alex reflects the outcome of a thorough assessment and external benchmarking process over the last six weeks in which the Board was assisted and advised by Russell Reynolds Associates.

Alex has considerable relevant experience across the Grocery, General Merchandise and discount retail sectors both in the UK and internationally.  This has included senior leadership positions at retailers such as Asda, Tesco plc and Kingfisher plc.  Since he joined the Group in October 2020 he has demonstrated impressive commercial acumen and operational management skills in addition to being a highly capable CFO.  The appointment of an internal candidate reflects the strengthening of the senior leadership team over the past few years.

The Board will now consider the most appropriate handover plan. A process to recruit a successor to Alex as CFO has already begun.  In the meantime, both Simon and Alex will remain in their existing roles in order to minimise disruption to the business.  A further announcement will be made when appropriate.  

Peter Bamford, Chairman, said, "On behalf of the Board, I am delighted to announce Alex Russo as successor to Simon Arora as CEO of B&M.  Since joining the Group, Alex has made a very positive contribution to the business.  He has demonstrated strong leadership skills and a deep appreciation of the B&M culture and business model, making him the outstanding candidate for the role.  

I would once again like to thank Simon for his role in the remarkable growth story of B&M.  He has brought exceptional clarity, focus and consistency, all of which have been fundamental to its success.  I will miss working with him when he does step down, but I am also very much looking forward to working more closely with Alex when he becomes CEO."  

Simon Arora said, "I would like to thank all our colleagues and stakeholders for their support over the last seventeen years. It has been an honour to lead B&M and together build such a large and popular retailer. I believe that Alex is uniquely well placed to continue B&M's success and I will work hard to ensure a smooth transition."  

Alex Russo said, "It is a privilege to have the opportunity to build on Simon's legacy and lead this fantastic business in the years ahead.  We have a well-founded strategy, a very strong customer proposition and significant opportunities for further growth ahead of us.  Along with the support of the Board, I look forward to working together with Bobby Arora and the rest of the senior management team in the years ahead."  

Remuneration 

Alex Russo's remuneration package will consist of a basic salary, benefits and variable incentive arrangements which are in line with the Group's Remuneration Policy. The key elements of the remuneration package are as follows: 

• Base salary of £800,000.
• Pension contribution of 3.0% of base salary in line with our Remuneration Policy and the outgoing CEO's remuneration package.
• An annual bonus maximum award of 200% of base salary, in line with our Remuneration Policy and the outgoing CEO's remuneration package.
• A LTIP maximum of 200% of base salary in line with our Remuneration Policy and the outgoing CEO's remuneration package.
• Benefits will also be in accordance with the Remuneration Policy set out in the 2021 Annual Report and Accounts and approved by shareholders at the 2021 AGM.

Source : B&M

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