Delivering long-term profitable growth

B&M is positioned for long term compounding earnings growth and cash returns for shareholders.

B&M is a leading European discount variety value retailer, with 777 B&M stores in the UK, 135 B&M stores in France and 343 Heron Foods discount convenience stores in the UK. Each fascia has the opportunity for many years of growth – with a relentless focus on price, relevant ranges and excellence in store operational standards.

B&M is committed to delivering long-term profitable growth through its four channels

B&M has many opportunities and many years of growth ahead as it broadens its appeal and expands its store numbers in the UK and France. In expanding its store numbers and increasing sales densities in existing stores, B&M expects to continue to deliver long-term profitable growth, generate cash and return excess cash to shareholders. B&M remains a rollout story, thereby we have confidence we will deliver compounding earnings growth and cash returns for shareholders.

There are four channels of growth:

1. New UK stores: A store target to operate at least 1,200 B&M UK stores

We plan to operate at least 1,200 B&M stores in the UK, which represents an increase of over 50% in store numbers compared to the year end. At our current pace of openings this represents over ten years of growth in store numbers. With new stores tending to be bigger than the existing average and with a higher proportion expected to have garden centres, the underlying growth in sales is expected to be greater than the 50%+ increase in store numbers.

New stores bring direct volume growth and our plans to open 45 gross stores in FY26 bring significant benefits to buying, productivity gains and cash-generation. Payback on recent new stores has been on average less than a year, so the more stores we open the better the cash-generation. We will always open in a controlled, disciplined manner, and we will not put a strain on the operational and support functions of the business. The quality of our openings is paramount. Rather than opening a larger number of stores in any given year we will always ensure new stores meet our strict financial criteria and payback requirements.

In conjunction with our new store openings, we will continue to maintain and update our existing store estate. Where the opportunity arises, we will replace older, legacy stores that are at the end of their lease with newer, larger stores, often with a small garden centre attached. This will result in square footage growth (a key driver of sales) outpacing growth in store numbers.

2. Positive LFLs over the longer term help offset cost inflation and help drive cash generating profitable growth

Our existing stores offer considerable scope for improving sales densities over the long term. Each 1% LFL sales growth is equivalent to opening over seven new stores, but without any capital expenditure or increases in fixed costs. LFL growth therefore tends to be highly profitable growth, which helps fund low prices (to drive further LFL sales), creates new jobs and generates good returns to shareholders. Growth in sales densities will be achieved by taking a bigger share of available expenditure in existing catchment areas as our relentless focus on price, value and retail standards drives brand awareness and frequency of shop with consumers.

Each year will be different and will be impacted by the overall economy, the competitive environment and the health of the consumer (financially and in terms of confidence). Overall, we expect and always plan to deliver positive LFL sales growth each year.

3. France will provide growth for many years to come

In terms of size and wealth, France has a similar population to the UK, where we target over 1,200 stores. Therefore, the UK estate sets a relevant benchmark for the potential scale of the French estate over the long-term. As we begin to accelerate our store opening programme, France will provide many years of profitable, cash generating growth.

We have transformed France in recent years and all stores operate under the B&M fascia. We continue to grow our FMCG ranges which helps drive sales densities and provides a “halo effect” for our General Merchandise offer. Pricing is highly competitive, and profitability is good, with a strong underlying profit margin. We will continue to evolve the offer and expect sales densities and our EBITDA margin to improve over the long-term.

4. Heron offers growth and offers other benefits to the core business

Heron is our discount convenience store operation, based primarily in the North of England and the Midlands in neighbourhood locations. Average size of our stores stands at 3,000 sq. ft. which means the majority are classified as convenience stores and can trade for more than six hours on a Sunday. Over recent years, the offer has been refined to include more ambient, fresh and General Merchandise products and this has resulted in a step change in total sales and sales by broad category. Space for the enhanced ranges was created by merchandising the traditional frozen food offer more intensely, which allowed us to remove freezers, reduce operating costs and reduce the capital cost of new stores. By merchandising more intensely, we were able to maintain frozen sales volumes while adding substantial sales in new areas.

Heron offers long-term potential through the store roll out and we continue to open new stores in a controlled and highly disciplined way.