Value-orientated chain B&M has defied the tough trading conditions in the retail sector by posting robust annual results, buoyed by new store openings and the success of its growing grocery offer.
The group’s overall revenue climbed by 17.1% to £3.49bn in the year to 30 March, with underlying EBITDA up 11.9% to £312.3m and pre-tax profit increasing by 8.7% to £249.4m.
In its core B&M chain in the UK, revenues increased by 8.7% to £2.79bn following the opening of a net 44 stores during the year. Like-for-like sales edged up 0.7% having recovered from weaker trading in the first half of the year after a lack of stock affected its end of summer sale. The chain had a strong finish to the year, with like-for-like sales in its fourth quarter growing by 5.8%, despite Easter this year falling after the end of the period.
B&M highlighted that it was seeing strong performance of its expanded grocery/FMCG ranges as consumers “continue to seek out value”. However, homeware categories were said to have had a disappointing year, dragging overall like-for-likes back by 1.8%.
Adjusted EBITDA from the B&M stores increased by 13.5% to £297.0m with margin up by 45bps to 10.6%, despite increased costs and the strong performance of lower margin grocery and FMCG products.
The group ended the period with 620 B&M outlets, with a further 50 gross new stores planned for this financial year. With a host of retailers offloading stores to cope with the tough trading conditions and shift towards online shopping, B&M stated that it was “benefitting from plentiful availability of attractive new store opportunities”.
Meanwhile, its Heron Foods unit generated revenue of £354.1m with it seeing “strong sales performance” as it benefitted from an improved ambient food offer by leveraging B&M’s supply chain. Its new store programme was accelerated and it opened a net 16 stores in the year with plans to open at least 15 over the next 12 months.
The group’s German chain Jawoll saw its revenue grow by 6.7% to £213.7m, driven by 10 new store openings and “modest” like-for-like sales growth. However, margins took hit as it cleared old slow-moving stock to make way for new ranges sourced through B&M’s Far East supply chain.
Recently acquired French discount chain Babou generated revenues of £129.1m. The group stated that it was progressing planned changes to the product mix and direct sourcing, as it moves it closer to the B&M format in the UK.
The company concluded its result by saying it had made a “pleasing” start to its the new financial year and that the B&M fascia had delivered its best-ever Easter trading season with like-for-like sales up “mid-single digit”.
Simon Arora, B&M Chief Executive, said: “B&M has again delivered strong results against the challenging backdrop of continued structural change in our industry, rising costs and uncertain times for consumers, demonstrating that its value credentials remain as resonant as ever with customers, whether they need a bargain or just enjoy one.”
He added: “We enter the new financial year with renewed trading momentum particularly in the UK, a high quality new store expansion programme in place, and investing in our new infrastructure to support future growth. I’m confident B&M is well-positioned to deliver further strong progress in the current year and beyond.”
Meanwhile, Arora played down recent speculation that the company might attempt a reverse takeover of Asda following the failure of the supermarket’s plan to merge with Sainsbury’s. He said that while he could not comment directly on market speculation, the company “does not need to do M&A for growth”.
NAM Implications:
- These standout results should be placed in a UK Mults context…
- …in order to appreciate their significance.
- Adding B&M positioning and profile…
- …make this a must for ‘invest’ labelling within your customer portfolio.
- And likewise for your global/regional colleagues.
