Value retailer B&M has recorded “exceptionally strong” performance over the last few months as demand for its grocery, DIY and gardening ranges increased during the coronavirus lockdown.
Like-for-like sales in the B&M stores rose 6.6% during its fourth quarter to 28 March, driven by people stockpiling groceries at the start of the pandemic.
In the eight weeks since then, the chain’s sales jumped 22.7% despite a “significant fall” in customer numbers. With most general merchandise stores closed during the lockdown, B&M benefitted from consumers buying its DIY and gardening products. Excluding those two categories, B&M’s like-for-likes rose by 10.3% over the eight-week period.
B&M warned that the strong growth in DIY and gardening may represent “significant pull-forward in demand”, driven by warm weather and customers being at home during the crisis.
The company also highlighted that the business was experiencing higher than normal operating costs in its distribution centres and stores due to social distancing measures.
Meanwhile, B&M confirmed that all 49 UK stores that had been temporarily closed at the start of the pandemic are now open again.
The group added that its Heron Foods chain had seen “strong performance” in both the fourth quarter and the early weeks of the new financial year.
“We have encountered exceptionally strong demand in our UK business over recent weeks,” said B&M Chief Executive Simon Arora. “Customers have been coming to our stores much less frequently through the lockdown but their average spend has been much higher than normal.”
He added: “We have seen a significant bring-forward of demand in some key categories and the remarkably warm spring weather in the UK has been a major factor behind this during recent weeks. We are not expecting this current level of trading to continue as normal shopping patterns resume.
“Clearly, there is also considerable uncertainty in relation to both the progression of Covid-19 and the economic outlook and it is therefore hard to predict future trading levels.”
Hannah Richards, retail analyst at GlobalData, commented: “Although initial results appear positive, B&M will face greater competition as non-essential retailers begin to re-open, and consumers return to specialists previously closed to purchase categories such as DIY & gardening.
“The implementation of social distancing measures within stores has resulted in higher operational costs, coupled with a 10% wage increase for instore and warehouse workers.
“Though current levels of trading are not expected to continue, B&M’s store portfolio which is made up of out of town locations and retail parks will serve it well as consumers continue to avoid busy shopping centres and opt for more wide and open retail spaces, easily accessible by car.”
NAM Implications:
- Carefully managed, there is little reason why much of this lockdown progress should be reversed.
- i.e. a ‘permanent’ shift of business away from traditional retailers…
- How does this relate to your B&M business?
