Underlying sales at B&M fell during its first-half period, although the discount retailer stressed that it was “well positioned” for the key Christmas quarter, having built up stock early to remove the risk of supply chain disruption.
The group’s total revenue increased by 3.7% to £2.64bn in the six months to 28 September, boosted by 39 gross new stores (30 in B&M UK, 5 in France and 4 in Heron). It plans to open 45 B&M sites in the UK across the full year as it pushes towards its long-term goal of reaching 1,200 stores over the next decade.
However, like-for-like sales in its core B&M chain in the UK were down 3.6%. The group blamed a 5.1% slide in the first quarter on the impact of peak Easter 2024 trading falling into the previous 53-week period and particularly wet weather. Its performance improved in the second quarter, with a decline of only 1.9%. The group noted that the balanced sales mix between FMCG and general merchandise remained intact and in line with its expectations.
Meanwhile, the chain’s trading gross margin also rose 66 bps year-on-year to 36.7%, reflecting more favourable freight rates, mix effects, and sell-through in general merchandise, which generated minimal markdown activity.
In France, B&M’s revenues increased by 6.8% to £247m, driven by volume growth from new stores and positive like-for-likes after a shift to a more focused FMCG and general merchandise range.
The group’s discount convenience chain, Heron Foods, saw revenues increase 1.1% to £276m despite “continued pressure” on its customer base.
Meanwhile, group adjusted EBITDA edged up 2% to £274m. However, adjusted operating profit fell by 1.8% to £258m after B&M faced higher costs following an increase in the number of stores, wages, and investment in its supply chain in France.
B&M stated that it was confident in its outlook for its second half and full year, forecasting that adjusted EBITDA for 2024/25 would be in the range of £620m to £660m versus £616m made last year. However, analysts highlighted the mid-point of the forecast was around 2% below market forecasts.
B&M’s Chief Executive Alex Russo noted that its product ranges across both grocery and general merchandise resonate “very well with customers at a time when disposable incomes remain under pressure and the tax burden continues to increase”.
He added: “The business is well positioned for the Golden Quarter with its continued focus on price, product and standards. While the consumer environment remains uncertain, the group has demonstrated it executes well in all trading environments.”
NAM Implications:
- The B&M model is right for the market.
- Their EBITDA performance appears to be meeting owner expectations…
- …with key stakeholders being kept informed of details.
- All of which should ensure supplier support for H2, including Christmas…
