Earnings Transcript for BMRRY - Q1 Fiscal Year 2025

Operator: Good day, and thank you for standing by. Welcome to the B&M Full Year 2025 Q1 Trading Update Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Alex Russo, CEO. Please go ahead, sir.

Alex Russo: Thank you. Good morning, everyone. First of all, thank you for joining us. U.K. participants, very good morning. I'm sure there will be U.S. 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, and 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 the 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 only 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 at 2.4%. So let me start with France. And then I will come back to B&M U.K. So France has performed and traded actually very well in the quarter, almost double-digit LFL and basically total growth on a local currency basis. So I'm actually quite pleased with France. And then 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 B&M U.K. 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 B&M U.K. 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 B&M U.K. The teams have worked well together and it's basically the same system infrastructure we have in the U.K. So that's a big thing that actually supports growth in France in the future. And the second element in France that gives me a lot of confidence, actually, the year ahead and thereafter, is that now we are 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 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, okay? B&M U.K., 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, okay? But what I can tell you, so what we did 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 months, is that we derisked the garden buy. 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 have allowed us to remove any downside on profitability on what has clearly been a challenging a Spring/Summer. April was rough on rain, I think generally for everybody. May, you've heard the commentators. So that for me, a big tick. Now we anticipated this, and we have exited Q1. That means June clean, we are cleaner than one year ago, and that means that there is no margin risk despite the weather. That's B&M U.K. That's never an issue, as you know, in France because France is actually much less acceptable on whether it's a warmer country, so Garden is never an issue in France. Okay? 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, we can -- the way we see the underlying LFL at B&M U.K. 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 B&M U.K. would not be far off from flat in the quarter. And that's on top of our prior year base, which was the highest last year of plus 9.2%, okay? So the dynamic in the quarter that gives me a lot of confidence is that, again, general merchandise has performed exceptionally well across a whole range. And just to give you some color on 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 Q2. 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 the whole of general merchandise. Home complex, depending on the calendar anywhere between 2,400 SKUs to up to 3,000 SKUs at the peak of the seasonal trading. So it's actually a bedrock on general merge. So you know we launched 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, yes. It cuts across several home categories. It also touches for example, pet, some electricals. It's to a 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, yes. 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 dilutive. 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 shops? And why do you think this is something fundamentally different than one year ago?

Gareth Bilton: Yes. 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 strength 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 a transition swift 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 colors, it covers all of our home departments, a real low opening price which drives that value message through.

Alex Russo: Thank you, Gareth. So it just brings it live. So if I were to summarize the trading section, general merchandise performed as we expected, very well. Home was exceptionally strong. DIY paint continues to go from strength to strength as stationery. So those are three examples. Despite the weather impact in Garden, having a sales mix ahead of 50%, I am confident heading into Q2 with that position. And operationally, as the buying supply chain and stores continue to be in good balance, and you can see it on shelf availability, which is strong. Basically, we're starting Q2, two to three weeks ahead of last year in terms of transition. All of that operationally is very good. It's actually strong for the customer and what it means for gathering specifically, Q2 is never relevant for us in terms of Garden. Garden is always a Q1 dynamic. We don't have any margin risk. We don't have any markdown risk, we are now in Q2. And basically, it's all around home and the rest of the general merchandise departments trading the business. So that's basically the shape. And it's important also to highlight that the same tone and customer offer, it's exactly the same in France in terms of EDV and Simply, okay. Very briefly, without context on Stockholm a gross margin, you know that we exited the financial year clean on stock. We're exiting Q1 clean on stock, and that basically means that, that could have highlighted in the RNS, our gross margin has been very strong in Q1. And actually, you can read by that, that is not lower than last year. Plus for me, a big tick and availability at the shelf edge continues to be very strong across all FMCG categories and general merchandise. Price position, I'm going to reiterate what you have already heard me before. FMCG, I am very clear against the big four, after loyalty, we measure this in detail every week, not just the buying team, but the operational team and Gareth's team, we are never 15% cheaper than the cheapest of the fall, and we are against the most expensive 20% cheaper after the loyalty discounts. So that's 15% to 20% band, is some change, are already move, and I'm very comfortable with the FMCG position. General merchandise. Look, it's a much more fragmented competition. I'm comfortable with the price. And you can imagine the EDV home, as an example, what it continues to do. In DIY, we are trading very well on price position, same as stationery back-to-school, is already on shelf. I am very comfortable with the price position on that side of the business. So that's what we do, and we will never let basically the competition get close to that, okay? So in terms of profitability, look, tough weather. I think we managed around that. We have been thoughtful and conservative a few months back, given the prior year base. What I can tell you has been a very profitable quarter for the business as a whole and B&M U.K. We haven't compromised store standards at all. I am very happy on availability and how the team is responding. We have no markdown risk heading into Q2 and the second half of the year, the supply chain continues to be flexible, and we continue to manage the cost model, which is variable in a way that actually we continue to serve customers. I'll finish with a couple of highlights that might help. We are now in Q1, three years in a row where staff turnover continues to decrease significantly. As you've heard it before, in the prior two financial years, we have been reducing staff turnover to the tune of 400 to 500 basis points per annum reduction year-on-year. We are doing that three years in a row, Q1. So that tells me the team is engaged. In terms of costs, freight, I have good line of visibility. I don't see any freight issues ahead of us. I think we have good negotiations the space, quality where we're opening continues to be highly disciplined. So we will basically trade profitably as we always do the next quarter. And when we get to half one results in November, you will hear from me and the team and make a very narrow range of profit growth for the year as we do it every year. So with that summary, I think it's a good moment now to open questions.

Operator: [Operator Instructions] The questions come from the line of Jonathan Pritchard from Peel Hunt.

Jonathan Pritchard: Sort of two-and-a-half, if I may. Firstly, on new space, I mean, most of these obviously Wilko and therefore, quite a few of them in town and city centers, has there obviously very strong performance changed your thinking a little bit? I mean, fewer car parks, does that mean more forward and slightly lower baskets or how does the dynamic work with Wilko? And how has that changed your thinking? And then sort of two bits on France. Does this IT and then distribution center mean that 11, would perhaps accelerate into the 20s and 30s in time? And secondly, the plans for the new DC in France. Are we talking another Bedford, I think, is that the second biggest DC in Europe. Are we talking about this being the second or third biggest DC in Europe? Or is it more a smaller unit?

Alex Russo: So the first question on the stores, we've opened now 19 in Q1 of the week, we've already -- we're already in the mid-40s including Q4 last year. What I would say is that the openings we are having, have higher sales densities on average than the existing states. We're trading well on the larger units, some of them above 20,000 square feet, some of them below, but actually, what is interesting is that it's a very diverse set of locations, some of them could be town centers. Some of them are basically retail products as well. And I think what we're probably doing better, and you can elaborate in here, Gareth. I think we're learning to adapt the range to a specific location. I think we have built on some of the location heritage pre-acquiring, for example, DIY, paint, stationery, very strong. But I would say those stores are performing well. Now we've opened 19, I'm happy with the sales density. I don't regret any single of the 51 or so that we earmark and I suspect that by the time we get to half one, we would have opened this year close to 30 stores. Anything you want to add, Gareth on that?

Gareth Bilton: No. I think, the key point from the Wilko is the heritage piece. We are -- what we see in those Wilko is the sales density accretive, and they are also healthy mix, GM mix stores because the heritage of those Wilko stores is strong in homeware, strong in DIY, strong in paint, all of which we're strong in our own operation. The FMCG offering in there is much bigger than there was. So I think that's what gives the different look or feel to those stores to the customers that shop there, but really focusing on the heritage of those stores where we are strong anyway is helping to drive those, those sales in the new stores.

Alex Russo: Absolutely. To answer your question on France, the answer is no, Jonathan. We will never engage a Bedford again. This is all around basically the right space at the right cost is basically all within the P&L structure. It doesn't create any one-off costs. Basically, it's a rental, so we'll do it in a very gradual basis. All of this is around setting the foundation to be able to drive that volume in France. So it's much more similar to what we have in the U.K. ex-Bedford, which is, think about 40,000 -- 40,000 square meters -- so 400,000, 450,000 square feet. It's all basically a revenue expense in line with the economics of France. And I think, look, the business continues to grow confidently. As I've said before, it's all around building the foundations culturally and back end, I think we are going to open 11 stores this year. And you've heard me now. I will continue to raise that in a disciplined way year-by-year. I don't believe on fast rollout. I think it's all around disciplined rollouts and all of this is consistent with the journey in France. I hope that answers the question, Jonathan.

Operator: And the question come from the line of Richard Chamberlain from RBC.

Richard Chamberlain: Yes, three quick ones from me, please, Alex. First of all, on the new ranges coming in, I just wondered why you've chosen to bring them in earlier this year. That sounds like that's been a sort of multiyear trend? Secondly, that the new stores added in the quarter, does that include sort of relocation and expansions? Or is that pure sort of gross new openings? And then the third one is just back on sort of Jonathan's point about France, how many new stores do you think that new capacity can support in France, would you say? That's my three.

Alex Russo: If we go back, let's say, three, four years ago, Richard, I think we had much longer, as you know, stock commitments. You've heard it before, now it's a much more flexible supply chain. We don't have to pet for a better world, the season on any big buy. So basically, because the supply chain is more flexible, availability is responding well. It actually allows us to give consumer a better transitional experience between the Q1 and Q3 golden quarters. So the Q1 and Q3 are always a big ones. Q2 and Q4 are always transitional. And actually, through the pandemic and after the pandemic, we've seen home specifically going from strength to strength is not the only category. And if we have the supply chain, if we have the product, if we have the value proposition, it just makes good commercial sense to give the consumer that experience. And not only with the added benefit, Richard, that actually, it has no markdown risk.

Gareth Bilton: I think that's the key point, Richard. When you start the Spring/Summer season of knowing that you derisked the Garden buy, you have two options to manage that markdown cost. One is you bring in the Autumn/Winter ranges early, which doesn't feel right. But here, there as you pre-plan an event which fills in the space, which is exactly what we've done. So it's not really a case of bringing in early. It's an additional incremental event, which we already got with non-margin diluted product.

Alex Russo: And what that allows us to do operationally to put it on the floor, Richard, is that you can only doubt if you are clean, which we are on Gardening. You follow me? Well, you don't have the space to do that, yes. So it gives the customer value. It makes the transition easier. And actually, it's margin accretive as well. Yes. That's kind of the first point. Richard, your second question on France. Just remind me briefly, it was?

Richard Chamberlain: How many new stores that will, that additional warehouse capacity support, do you think, in terms of expansion?

Alex Russo: I think, it sets us for a good, easy, I would say, 50% to 75% increase to the current network, but we've been planning for this for a couple of years. So we are now putting on the ground. But again, I reemphasize the same question to Jonathan. This is not bad for. No, this is same P&L, basically cost-to-serve ratio, we're doing in a very low-cost way, and it's basically planning for the future. So it will enable us to grow cost effectively in the medium term in France. Yes?

Richard Chamberlain: Yes. Got it. Okay. And my other one was just about relocations and expansions. How are they...

Alex Russo: So with COVID-19, we'll be close to therapy opening growth by half one. From memory, I think we have relocated and/or closed five in Q1. We always shoot 5 to 10 per annum, is always accretive. It's always planned, it's how we recycle assets, and it's all basically part of the opening program and its earnings enhancing.

Operator: The next questions come from the line of Adam Cochrane from Deutsche Bank.

Adam Cochrane: A couple of questions, if I can. First of all, on footfall. Can you just describe in the quarter gone, how footfall has progressed? Is there an impact when you sort of talk about the weather impact. Is that largely impacting footfall with less people coming into stores. But other than those if you can isolate any weather impact, are we still seeing new customer growth coming in, whether it's customers trading down or anything else over the period? So I suppose I'm just trying to say in another way, is it business as usual? And then there's the weather on top. When the sun comes out, does the footfall recover? I suppose that is my first question.

Alex Russo: The answer is yes. Let me give you some color. So if you take B&M U.K. total sales growth of 1.5% in the quarter, footfall have been significantly faster than that. And the same, if you measure it on an LFL basis, LFL transactions would have been faster the LFL value. So the dynamic of LFL transactions of customer traffic, customer receipts basically have maintained the same pattern, so if you are in a normalized year like the plus 3.7% ended for last year, and we've said at least half of that LFL is driven by positive level transactions. Yes, we have seen the same higher footfall relative to the top line. And when the sun did come, it -- of course, it leaves the boat. So I'm comfortable with the LFL transaction dynamic on the business. I think it's -- I think you have to measure it relative to its baseline, if that makes sense. I hope that answers your question.

Adam Cochrane: It does. And if we were to isolate what proportion would you refer to as being seasonal in the first quarter of the business?

Alex Russo: So ballpark, if you take the underlying 3.5 negative, excluding the seasonal impact -- sorry, the calendar impact, and you remove the tuning impact of Gardening and some of the smaller, some of the toys around the edges, which are seasonal or some of the pools, and let's say, trampolines for the sake of argument, I think the LFL for the quarter would have been flattish. That's the ballpark.

Adam Cochrane: And one on freight, you said that there's no problem. Your freight commitments, I assume are being honored both in terms of capacity and price as it stands today. But we are hearing that there are some pressures coming as you look into the second half of the year and into early next year. Can you just sort of reassure us as to why you don't see the higher freight rates as a problem to the business?

Alex Russo: Yes. Look, I'll answer honestly and as always, but I'm trying to navigate in here a commercially sensitive matter, which goes on print and in reality, is a commercial advantage we have. What I can tell you is the negotiations we have because of the volume we move allows us to have the right level that does not impact us as a headwind compared to last year, so in the round, I'm very comfortable with the negotiation. But what underpins that we would be, and we are shipping significantly more containers year-on-year on general merchandise from the Far East, both on a total LFL basis. So the volume that we're driving on general merchandise actually is significantly higher year-on-year. And effectively, that allows us to negotiate the right tariff. If we did not have that volume throughput, I think it would be a different issue. So I think each company -- each competitor will effectively be having a different negotiation. What I can tell you is that what allows us to have that level of input cost negotiation is that the number of containers, whether it's total or on a like-for-like basis, we're shifting year-on-year is significantly higher than last year. And you can read by that, it's significantly faster growth than what the headline sales suggest.

Adam Cochrane: One more clarification. You talked about double-digit like-for-like in France, but the constant currency sales growth in France was only 9.6%. Was that sort of just a rounding comment in terms of...

Alex Russo: Yes, correct. So what I meant basically is close to double digit on a local currency, correct.

Operator: And the questions come from the line of Monique Pollard from Citi.

Monique Pollard: It's good that, most of my questions have been answered. I just have a couple of follow-ups on openings and closures. So the first is just on Heron. Just wondering if we're still expecting to open about 20 gross new stores this year, because obviously none in the first quarter?

Alex Russo: The answer is yes, absolutely. We always shoot for 20 openings on Heron, and you will see that picking up rapidly in Q2. Correct.

Monique Pollard: Perfect. And then a final quick one, just on the B&M U.K. closures. So I know previously you talked about three to five closures per year, and we've done five closures in the first quarter, but I don't know how many of those are relocations and therefore, what we should expect for closures for the rest of the year?

Alex Russo: Most of those five are actually relocations, yes, but I will only relocate and/or close, as you know, if we can take more profitability on that catchment, yes? So we always have this end of the tail recycling, but we ever relocate or close something around the edges, it's never because that unit is unprofitable. It's simply because I can take a higher sales and profit cash density from that catchment, yes. So not surprising, we opened in excess of 50 growth openings between Q4 and Q1. So relative to that level of openings, it's not a particularly a unusual number, yes?

Operator: And the next questions come from the line of Geoff Lowery from Redburn Atlantic.

Geoff Lowery: Just one question around gross margin, please. You've obviously indicated that it was up in the U.K. given the product mix in terms of general merchandise underperforming FMCG was probably negative. What was the...

Alex Russo: Sorry for interrupting, could you say that final statement again to make sure I've heard it?

Geoff Lowery: Yes. So you indicated that the B&M U.K. gross margin was flat to up in Q1. From your comments, it felt like food and FMCG would have outperformed general merchandise in the quarter. Given that, that's negative for gross margin? What was the sort of countervailing positive, in particular, bought in COGS?

Alex Russo: So the way to think about -- so the point I'm making on gross margin is been strong. And broadly speaking, gross margin percentage has been fairly similar to Q1 last year, which despite the weather and the tuning of Garden has been a good outcome. So general merchandise performed well. And we see a high level of a stability on FMCG gross margin. We haven't seen any pressure there. So basically compared to Q1 last year, Q1 was strong last year, it's been strong this year at a total level. And in terms of supply chain benefits we're getting from China, you've heard me a few weeks back. We continue to see benefits, given the volume we are moving. We continue to drive that volume. We are negotiating hard and actually where we think it's appropriate, EDV in home is a good example. It's a small subset, where we think we can accelerate volumes, we give customers fantastic value, but I think the landscape on gross margin for the year ahead, which is no new news for us is positive.

Operator: The questions come from the line of Izabel Dobreva from Morgan Stanley.

Izabel Dobreva: My first question is on your like-for-like, which you mentioned is flattish. Are we to understand that it's just a little bit negative? And then my question is, could you talk through the drivers behind the deceleration versus the like-for-like in Q4 when I believe it was positive 1%, just over 1% adjusted for Easter? Then my second question is on the launch of the Simply versus Everyday Value range. Could you explain the rationale behind it? Because I was under the impression that the Simply range was already everyday low cost, everyday low value. So what is the difference in price point between these two ranges?

Alex Russo: Thank you. So the first question is, in terms of LFL, removing the calendar impact, which is Easter, the coronation impact, basically, the LFL is 3.5%. I don't compare that LFL to Q4. I compare that LFL with Q1 FY '24, which was plus 9.2%. That negative LFL of GBP 3.5 million, which is excluding the calendar impact, basically was as I've stated, impacted by what was a tough weather, but we had anticipated plan for that weather. So in reality, if you were to remove that weather impact, it is flattish, yes, but it's driven by a continued trajectory on customer transactions to receipts and volume. So internally, I look at that number against quarter-on-quarter. That is the right way how we measure that metric. And in terms of EDV and Simply, we planned this one year ago. I think the pandemic and some of the work we did earlier on in terms of value perception, continue to drive a bit of the style, the design have truly transformed the home categories. I think this has been a continuation that started probably, I would say, 1 year to 1.5 years before pandemic. I think you've heard me before, I don't see a lot of strength in the competition across that area specifically. And I think fundamentally, if we have the chance to give value even to a greater extent to the customer. At a time when the customers are feeling the cost of living crisis in a significant way, that's what we do as a business. I think it is my responsibility to continue to always be ahead of the competition, drive that price point, reinforce that value position, it's a bit of innovation. The product looks fantastic, creates excitement. It's a treasure trove of how the B&M brand basically works. And I am happy to be able to give that value back to the customer. That is a strategic rationale. I hope that answers your question.

Izabel Dobreva: Great. I had one final one, if that's okay. Just on your margin. You made a lot of comments around the gross margin. I was wondering if you could also elaborate on the EBIT margin and how you plan to manage the potential OpEx deleverage?

Alex Russo: OpEx deleverage. OpEx deleverage, look, we've delivered last financial year, 12.6% EBITDA margin at B&M U.K. We don't comment on EBITDA margins on a quarterly basis. What I can say is that the quarter has been very profitable. I've said repeatedly externally that we trade B&M U.K. at 12% to 13% EBITDA margin every year. I have no reason to change that. The plans are set to do that. And in terms of cost productivity, when we were at Bedford you, for example, if I use logistics as an example. Our logistics last financial year, for example, traded at a lower cost of sale than the prior year, what allows the business to drive some of that is we continue to drive volume. That leverage is the cost. We don't increase head counts. We have a very variable cost element in the business. The head count in head office is the same as pre-pandemic, despite a business which is substantially higher. In terms of revenues, yes, we put the hours where we need. And Gareth gave the example, for example, on how we innovate on EDV, which is productive and time effective for the stores to handle that. So look, we will contain, we will manage the cost lines through productivity. I think volume is what allows us to do that. And I will always do it in a way that I do not take any pound away from the customer experience, which is what we do in terms of customer standards and why I'm very comfortable with heading into the rest of the year is whether it's FY '24 or golden quarter, we do it in the right way. We don't take hours out of the shopping experience unlike some competitors and what allows us to that is confidence in driving that volume. Okay?

Operator: The questions come from the line of James Anstead from Barclays.

James Anstead: Just one question for me. I think looking back at the transcript from early June, I think you said at that point that you planned for positive like-for-like and the consensus numbers you sent around last week showed the market is expecting a small positive like-for-like for this year as a whole. I know you don't kind of guide to specific like-for-like numbers. But do you still thinking a positive number this year is deliverable after minus 5% in the first quarter?

Alex Russo: I have no reason to change that view at this stage. The answer is yes.

Operator: [Operator Instructions] And the questions come from the line of Paul Rossington from HSBC.

Paul Rossington: Two questions from me, please. One, could you elaborate on your comments on inventory? Should we actually -- it sounds like you're pretty happy with the way you've exited the period with inventories. Does that suggest maybe lower like-for-like inventories year-on-year? And is that something we should be thinking about for the full year? And then my second question is quite a cheeky one just to ask whether you are commenting at all on the exit run rate for the period in terms of like-for-like?

Alex Russo: I'll give you a cheeky response on the second one, sorry. So on the first one, look, if you go back, Paul, to the end of FY '24, we've had two years in a row in inventory has been exceptionally clean. And I think that's a very good thing. And the reason why -- we've been able to do that is because the supply chain flexibility continues to increase. So not only the pound inventory, however you measure it as a percentage of sales has come down over the last couple of years, but availability has gone up, yes. That's -- that's the magic of the balance, if you want. So in terms of Q1, look, we've exited clean. I have the right amount of inventory, not too much, not too little, and I don't have any markdown to deal with. We are now preparing the volume growth for the second half of the year. I'm not seeing any impact on delays for us. We have planned for that. Availability is fine. But the context is we have prior two years of exceptional things. So look, I was in Dallas, let me just give you one example. I was in Dallas earlier part of this -- earlier part of last week with some investors, and we're walking around a few shops. And let me tell you, so I think somebody might have to put your speaker. Are you okay, can you hear me okay, Paul?

Paul Rossington: Yes. We can. Sorry.

Alex Russo: I mean, just anecdotal, and I'm not going to necessarily mention which discounters were they, but you could walk into the shops and you could see the boxes of Christmas, for example, or Valentine's Day basically wrapped up for the next season on the higher canopies on the shop floor. So we don't do that. And that is what gives me the underlying confidence on the margin. It's not just the intake negotiation, but we don't carry seasonal stock from one season to another. So I flagged that poll at year-end, and that allows us to basically plan on that transition ahead year-on-year. Having the right stock lean with high availability, it is always a sweet spot for margin, because I am not carrying any stock that I don't need. So that's a context heading into Q2 and golden quarter. And availability is holding very strong. And to your second question on LFL, I think Dave has made it very clear, we are going to issue always actuals in half one, full year, Q1 and golden quarter, and that's what we will have when we exit half one.

Operator: We have no further questions at this time. So, I'll now hand back to Alex Russo, CEO, for closing remarks. Thank you.

Alex Russo: Thank you, everybody. I appreciate the questions. I would like to just summarize, look, the businesses well set up, well underway ahead of transition year-on-year. The input metrics are where they need to be. And I would just highlight two closing remarks. The colleagues are in good shape inside the business. I can see that through the internal metrics. I think that continues to give me confidence that we are giving customers the right experience. It's not around just shops. I think you've heard me or John or Gareth talk about the balance between buying, supply chain and shops. It's in good equilibrium and fundamentally that allows us to continue to serve customers. I think customers will be feeling the cost of living prices. I think they are -- they have been feeling this for the last number of years. And I think as leading discounter is our responsibility to continue to drive that value ahead of the market. We continue to do so in a very disciplined way. But we're going to always do it in a very profitable way every quarter. And that's where we are. So we start entering Q2. So I don't take your more time. Thank you for joining us, and I'm sure we'll be connecting soon, okay?

Operator: This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a good day.

Alex Russo: Thank you, everybody. Bye-bye. See you.

Operator: Bye-bye.