* This report includes Alternative Performance Measures (APMs) which we believe provide readers with important additional information on the Group. A glossary of terms and reconciliation to IFRS amounts is shown on page 21.

Revenue for the Retail business of GBP1,039.8m reflected, on a constant-currency basis, a like-for-like ("LFL") sales increase of +14.6%. Total revenue in the year increased 9.4% after adjusting for the impact of closed stores. The volatility of the trading environment discussed earlier was most evident in our Retail business, which made forecasting particularly difficult. Demand for our motoring products suffered from a supressed market throughout FY21 as lockdowns markedly reduced the number of journeys, with customers opting to work from the safety of their homes. Motoring like-for-like declined 12.1%, better than transport data would suggest, but still saw weekly LFLs ranging from -75% to +20%. There were a number of positive performances within motoring, such as our touring products and car cleaning, but many product areas saw LFL declines through much of the year.

Our cycling performance was much stronger, with like-for-like growth of 54.1%, as we worked hard to source stock from new and existing suppliers and serve the increased demand within the market. Cycling was equally hard to predict, and although performed very well across H1, with LFL peaks of over +100%, H2 saw more volatility from week to week with LFL declines late in Q3 and early Q4.

The differing category fortunes resulted in the mix of motoring within Retail decline by almost -12ppts vs. Cycling against last year. The Retail Operational Review in the Chief Executive's Statement contains further commentary on the trading performance in the year. Like-for-like revenues and total sales revenue mix for the Retail business are split by category: 


 
              FY21     FY21                 FY20 
              LFL (%)  Total sales mix (%)  Total sales mix (%) 
Motoring      -12.1    46.1                 58.4 
Cycling       +54.1    53.9                 41.6 
Total         +14.6    100.0                100.0

Gross profit for the Retail business, at GBP502.0m (FY20: GBP458.4m) represented 48.3% of sales, an increase of +10bps on the prior year (FY20: 48.2%). Underlying gross margins of cycling and motoring improved more significantly than the headline number, which was diluted by product mix into lower margin cycling and a currency impact within the broader gross margin due to fluctuations in the year end spot rate. The gross margin improvement within the categories reflected the significant work carried out over the last 18 months on our sourcing strategy for both bikes and motoring products, as well as our work to optimise promotional activity throughout the year. Over the year, Cycling gross margins improved by +680bps and Motoring by +40bps vs FY20.

Retail operating costs before non-underlying items and IFRS 16 were GBP410.6m (FY20: GBP404.3m) an increase of 1.6% on FY20. The focus on operational efficiency and procurement continued in FY21, offsetting the impact of volume and mix, whilst simultaneously allowing the business to invest, albeit at a reduced level, in our strategic initiatives. Some of the highlights included centralising all customer contact and further development of our digital platform to enhance our customer experience including bookable bike slots and our WeCheck App. We saw almost GBP7m of GNFR costs removed from the Retail business through continued review of services and tendering processes. We saw 19 lease renewals, saving on average -30% on annual rents, and we continued to convert more stores to LED lighting and building management systems, saving over 40% on annual converted stores utilities consumption.

Naturally, due to the size of the Retail business, a greater proportion of the costs associated with COVID-19 were within its costs. Of the GBP33m mentioned above, GBP25m arose in Retail, offset by GBP33m of business rates relief.

Autocentres 


                                FY21        FY20        FY20 
                                                                    52-week 
                                (52 weeks)  (53 weeks)  (52 weeks) 
                                                                    change 
                                GBPm          GBPm          GBPm 
Revenue                         252.5       194.1       191.8       +31.6% 
Gross Profit                    154.3       126.9       125.6       +22.9% 
Gross Margin                    61.1%       65.4%       65.5%       -440bps 
Operating Costs                 (141.6)     (121.4)     (118.9)     +19.1% 
Underlying EBIT pre-IFRS 16*    12.7        5.5         6.7         +89.6% 
Non-underlying items            (3.7)       (2.6)       (2.6)       +42.3% 
Impact of IFRS 16               0.8         0.1         0.1         - 
EBIT post-IFRS 16               9.8         3.0         4.2         +133.3% 
Underlying EBITDA pre-IFRS 16*  19.3        11.5        12.6        +53.2%

* This report includes Alternative Performance Measures (APMs) which we believe provide readers with important additional information on the Group. A glossary of terms and reconciliation to IFRS amounts is shown on page 21.

Autocentres generated total revenues of GBP252.5m (FY20: GBP191.8m), an increase of 31.6% on the prior year with a LFL increase of 9.8%. Non-LFL revenue in the year included benefits from the acquisitions of both Tyres on the Drive and McConechy's in November 2020, alongside existing Autocentres that had been open less than 12 months.

Gross profit, at GBP154.3m (FY20: GBP125.6m), represented a gross margin of 61.1%; a decrease of 440 bps on the prior year. As stated earlier, the decrease in gross margin % was solely a result of annualisation of the FY20 acquisitions, which have a dilutive effect as the operating model is quite different. These businesses tend to be lower gross margin but also lower cost. There is an opportunity for us to grow margin, over time, through a greater mix into service and repair, but the gross margin will remain lower than that of a core garage.

All businesses saw their respective gross margins improve during FY21, with the continued development of our PACE Digital Operating Platform supporting buying efficiency across garages, boosted further by a slightly lower mix into tyres, which tend to be lower margin.

Operating costs were GBP141.6m, +GBP22.7m above last year, of which GBP18m was a result of the annualisation and growth of our acquisitions from FY20. COVID-19 costs within Autocentres totalled GBP5.3m, offset by GBP6.0m of relief through the Retail, Hospitality and Leisure Grant Fund. The remaining cost increase was the result of growth in the underlying business.

Autocentres' Underlying EBIT was GBP12.7m before IFRS 16 (FY20: GBP6.7m) a strong performance, reflecting the continued growth and optimisation of our LFL business, alongside the annualisation and expansion of FY20 acquisitions. Underlying EBITDA before IFRS 16 of GBP19.3m (FY20: GBP12.6m) was 53.2% higher than FY20.

Portfolio Management

The last 12-18 months have seen some of the most significant changes in the Group's portfolio since the acquisition of Autocentres over a decade ago. Within Q3 FY20 we saw the acquisition of McConechy's Garages and Tyres on the Drive, followed shortly by the closure of our Cycle Republic business, including 22 stores, at the close FY20. Within FY21 we have continued to grow our services business, increasing the number of HME vans and acquiring Universal at the end if the financial year. We also, however, took steps to further improve the profitability and efficiency of our business through the closure of 59 lower return stores and garages.

The total number of fixed stores or centres within the Group stood at 781, with a further 143 HME vans and a further 192 commercial vans supporting mobile tyre fitting within McConechy's and Universal as at 2 April 2021. The portfolio comprised 404 stores (end of FY20: 472) and 374 Autocentres (end of FY20: 371). Mobile locations grew by 156 vans, increasing coverage of the most in-demand regions within the UK.

The following table outlines the changes in the portfolio over the year: 


                        Retail  Centres  Vans 
Relocations             -       -        - 
Leases renegotiated     19      7        - 
Refreshed               -       -        - 
Openings/Acquisitions   -       20        159 
Closed                  42      17       -

Within Retail, 42 low return stores closed during the year, largely in the final quarter. It was considered more profitable to the Group, on analysing the anticipated sales transfer to other channels and neighbouring stores, to close these stores and reduce the overall cost base. Where there was term remaining on any leases at the point of closure, provision has been made in the balance sheet to cover occupancy costs to the point of lease expiry. A further 22 Cycle Republic stores, along with the Boardman Performance Centre, are also no longer part of the trading portfolio.

The number of lease expiries, or breaks under option, increases significantly within the next five years. Retail will see almost half of stores experience optionality within five years, allowing for a high degree of flexibility within the estate.

Within Autocentres, no centres were opened, but 20 locations acquired in the year. 17 were closed, taking the total number of Autocentre locations to 374 as at 2 April 2021 (end of FY20: 371). No Autocentres were refreshed in the year (FY20: 14).

With the exception of eight long leasehold, and two freehold properties within Autocentres, the Group's operating sites are occupied under operating leases, the majority of which are on standard lease terms, typically with a five to 15-year term at inception and with an average lease length of under six years. The acquisition of Universal resulted in the purchase of 6 freehold properties but all have been sold and leased back within the first two periods of FY22.

Net Non-Underlying items

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