Heron Foods, the discount supermarket owned by the operator of the B&M chain, has posted a healthy rise in annual sales after it benefitted from new store openings and heightened demand for groceries during the pandemic.
Over the year to 27 March 2021, revenues at Heron Foods rose 6.4% to £414.8m as its stores in neighbourhood locations and value-based offering proved popular with consumers shopping locally for essentials.
Gross margin remained broadly flat, reflecting a stable product mix. However, higher costs such as staff wages contributed to EBITDA falling 3.5% to £24.6m and adjusted margin declining by 63bps to 5.9%.
Heron Foods opened a total of 17 gross new stores and closed 4 underperforming stores during the year, bringing the total to 306.
Simon Arora, Chief Executive of B&M European Value Retail, said Heron Foods had the potential to become “multiple times larger” than its present size. However, he stressed that its growth will be slower than the B&M fascia due to the nature of locations required and the practicalities of distributing chilled and frozen food. For the 12 months ahead, the chain is planning a similar number of new store openings as last year.
NAM Implications:
- Worth a what-if on these assumptions.
- i.e. if stores in neighbourhood locations and value-based offering…
- ..match your target consumer needs…
- …acting now could help.
