Alongside its half-year results, the value-orientated B&M chain said trading in its stores had been good in the first weeks of the key Christmas quarter as shoppers seek savings amid the cost-of-living squeeze.
With surging inflation and weakening consumer confidence, several major retailers have warned in recent days that festive sales could be disappointing, potentially pushing more businesses towards the edge of collapse.
However, B&M said today that like-for-like sales in its main UK business were up 2.5% in the first six weeks of the final quarter. This included “strong” sales of non-grocery categories, where some cash-strapped shoppers have been focusing their cutbacks.
“Sales momentum is good as we enter a difficult period for the economy and consumers,” said Chief Executive Alex Russo.
“Our value-based approach is winning with existing and new customers, and we will do our very best to help them weather the cost-of-living crisis. We are well positioned as we trade through the Golden Quarter and our strategy remains unchanged – a relentless focus on price and product.”
Over the 26 weeks to 24 September, B&M’s group revenues increased by 1.8% to £2.31bn after sales picked up in the second quarter (+6.3%) after a decline in the first (-2.3%). Group adjusted EBITDA fell from £282m to £232m, driven by the reduction in gross margin. However, the group noted the figure was well ahead of its pre-pandemic EBITDA of £151m.
In the B&M UK fascia revenue, like-for-like revenues slipped 3.9%. However, LFLs were up 2.0% in the second quarter, compared with a decline of 9.1% in the first, which was up against strong seasonal sales in the previous year when Covid restrictions on other retailers boosted trade at B&M.
Adjusted EBITDA in the B&M chain was down 10.6% after gross margin was reduced by 213 bps due to higher markdowns in the gardening category resulting from the late arrival of warm weather.
The group continued to make good progress in France. Sales jumped 18.2% and all stores are now operating under the B&M banner.
Meanwhile, sales at the Heron Foods chain increased by 14.6% as consumers were attracted to its convenience discount offer. Adjusted EBITDA rose from £13m to £14m (6.1% of sales).
B&M kept its profit guidance for this year, although its share price fell over 5% in early trading amid concerns that the chain might have to discount products to maintain its sales momentum in the coming weeks.
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