Year-end results published today by value retailer B&M highlight its success during the pandemic, with soaring sales and a more than doubling in profits. However, the group cautioned that like-for-like figures are expected to be negative this year, given the strong comparatives.
The group’s UK stores were allowed to stay open through the multiple lockdowns because they sell some food and other essential items. Its low prices and out-of-town locations also chimed with consumers, helping drive total revenues up 25.9% to £4.80bn.
Group statutory pre-tax profit jumped 108.5% to £525.4m, whilst adjusted EBITDA climbed 83.0% to £626.4m due to higher sales densities and elevated margins because of less markdown activity.
The 681 B&M fascia stores in the UK saw revenues increase 29.9% to £4.08bn, with like-for-like growth of 23.8%.
Meanwhile, revenues in the 306-strong Heron Foods chain grew 6.4% to £414.8m after it benefitted from heightened demand in grocery stores, particularly in neighbourhood locations.
Conditions for the group’s Babou business in France were more challenging due to the pandemic-related trading restrictions imposed by the government. However, the 104 stores still managed to grow revenues by 9.1% to £309.1m, boosted by their conversion to the B&M fascia.
Simon Arora, B&M’s Chief Executive, said: “The last year has been an exceptional one. Our results reflect the speed at which we responded to the challenges presented by Covid-19, and the strength of our execution.
“The core B&M UK business, as an essential retailer, traded throughout the year and welcomed a number of new shoppers, with colleagues working tirelessly to maintain on-shelf availability and provide a safe shopping environment. We also made strong progress in France, despite many stores being closed for up to ten weeks throughout the year.”
Looking at more recent trading, the company revealed that B&M UK had seen like-for-like sales in the first nine weeks of its new financial year fall 1% year-on-year. Trading was said to have been volatile at a weekly and product category level, particularly since the easing of lockdown restrictions.
The group expects this to remain the case this year as it comes up against strong comparatives. It stated that it was too early to predict revenue and profit, and while group gross margin is likely to revert to more normalised levels, it would work to keep its adjusted earnings margin higher than historical levels.
The group highlighted that it was also contending with inflationary pressure in its supply chain, although Arora said B&M was “somewhat insulated by its size” and the firm’s strategy of directly sourcing products from Asia.
“Our buying power with both factories and shipping lines has insulated us from some of the wild fluctuations in prices,” he said. “We deal directly with over 300 factories and we have multiyear or multi-decade relationships with many of them.”
Arora concluded: “There are many uncertainties as society slowly emerges from lockdown and trading patterns are likely to be unpredictable for much of the year. Within our UK business, we will be up against the strong comparatives from last year but we remain confident that the B&M customer proposition, with its modern network of predominantly Out of Town stores and value-led variety offer, will prove highly relevant to the needs of shoppers.”
The group stated that its long-term growth strategy remained unchanged with it committed to reaching its target of at least 950 B&M stores in the UK, with 45 gross new outlets expected in the year ahead.
NAM Implications:
- All the advantages of essential and non-essential mix in Lockdown…
- …optimised by B&M.
- And given that 2020 represents a decade in business experience…
- …B&M continues on a roll that suppliers would be unwise to miss…
- …whilst coping with strong YOY comparatives.
- Suppliers should use 2019 as a base for assessing B&M progress.
