Against tough comparatives with bumper sales last year, B&M has revealed weaker underlying performance in its main fascia and Heron Foods chain. However, the value-oriented retailer played down fears around Christmas shortages, saying its stores had good stock availability after deliberately importing general merchandise earlier than normal.
Over the 26 weeks to 25 September, total group revenues increased by 1.2% to £2.27bn, with pre-tax profit up 2.4% to £241.4m. However, adjusted EBITDA was down 4.6% to £282.2m.
The core B&M chain grew revenues 1.3% to £1.91bn after 14 new store openings and “pleasing” performance in grocery. However, like-for-like sales across its 686 sites slipped 5% against surging growth during the same period last year when its stores were allowed to stay open during the Covid lockdowns. The group highlighted that two-year LFL sales were still up 16.8%, representing a significant increase in its pre-pandemic store sales densities.
In the first six weeks of its current third-quarter LFL sales had weakened further, down 8.9%, reflecting “highly elevated” sales in the same period last year owing to unusually early Christmas trading.
The chain’s gross margins improved 153bps to 37.3%, driven by the strong performance of higher-margin general merchandise and seasonal categories, and limited end of season markdowns. However, B&M’s adjusted EBITDA fell by 6.3% to £257.4m due to the weaker underlying sales.
Meanwhile, the group’s discount convenience chain Heron Foods saw revenues fall 6.1% to £203.1m due to the tough comparatives and average transaction values normalising. Adjusted EBITDA decreased by 26.7% to £13.4m after margin slipped 186 bps to 6.6%.
In France, the group’s revenues increased by 10.6% to £155.4m after recovering from strict lockdowns in the country. At the end of the period, its French estate consisted of 104 stores, of which 100 were operating under the B&M banner. The group stated that the performance of the re-branded sites continued to be “encouraging”.
Whilst some retailers have been grappling with delays in international supplies, compounded by labour shortages in the UK logistics network, B&M said today that supply chains across its business remained robust.
“We have responded decisively to supply chain challenges by leveraging our strong supplier relationships and we have improved in-store execution,” said CEO Simon Arora.
“As a consequence, we are fully stocked heading into the golden quarter,” he added after highlighting that consumers were continuing to be drawn to its “value for money” offer.
Arora concluded: “Although the pathway to a ‘new normal’ remains uncertain and the industry faces a number of supply and inflationary pressures as we enter the second half of the financial year, we are very confident that the B&M Group is well-positioned to navigate these and will continue to be successful both in the UK and in France.”
