Supported by heightened demand for its value offering during the pandemic, the B&M group continued its meteoric rise during its first-half period with the business now worth more than Sainsbury’s.
Over the 26 weeks to 26 September, the discount retailer’s underlying pre-tax profits surged up 128.5% to £253.6m on group revenues that increased by 25.3% to £2.24bn.
The core B&M chain in the UK saw revenues climb 29.5% to £1.89bn with like-for-like growth of 23%. However, the performance of its 657 stores moderated slightly over the course of the six-month period with like-for-like-growth easing to 19.1% in the second quarter compared to 26.9% in the first. B&M expects sales growth to moderate further over the remainder of the year, but said this hadn’t happened yet.
Nine new B&M stores were opened, although this was offset by the closure of eight stores that were “undersized or poorly located”. The group is on track to open 40 to 45 gross new B&M UK stores this financial year, offset by 10 closures.
B&M’s adjusted EBITDA doubled to £274.7m with margin increasing by 530 bps to 14.7%, due partly to a shift in mix towards higher-margin non-grocery categories.
Meanwhile, the group’s discount convenience chain Heron Foods saw revenues climb 14.8% to £216.2m, aided by six new store openings taking the total to 299. It was said to have seen “good like-for-like sales momentum” with ambient food ranges in particular performing well.
The group’s French business Babou saw revenues fall by 2.4% to £140.6m as a result of the closure of all stores for the first 6 weeks of the financial year under the French Government’s initial lockdown. The unit operates 103 stores in total, 37 of which have now been converted to the B&M banner. The group stated that the chain has seen positive like-for-like sales growth since the stores re-opened in May.
Commenting on the results, Chief Executive Simon Arora said: “The group delivered a strong performance in the first half, with our business model proving well-attuned to the evolving needs of customers.
“Our combination of everyday value across a broad range of product categories and convenient out-of-town locations has proved popular with shoppers … Despite the wider economic uncertainty and ongoing restrictions related to Covid-19, we remain confident in our business model and future prospects.”
B&M’s rise up the retail rankings was cemented in September when it entered the prestigious FTSE 100 Index. Shares in the group have risen nearly 50% over the last year, with the business currently valued at £5.2bn. This is significantly higher than the market capitalisation of Sainsbury’s which is £4.4bn.
NAM Implications:
- All the benefits of ‘right place, right time’.
- And 19.1% L-f-L growth still good, and the right place to be…
- …B&M and its suppliers.
