B&M Success driven by grocery
The seemingly unstoppable B&M has logged double-digit revenue and profit growth for its financial year. Against strong comparatives, UK revenue, which comprises B&M and eight months of Heron sales, rose to £2,776m. The retailer is not entirely immune to the blight that other retailers face, and like-for-like sales in the fourth quarter were less strong than the preceding quarters – a result of poor weather conditions which left consumers at home. Adjusted profit before tax increased to £221.5m.
Grocery has been the star-performing category as consumers seek out value in essential items – and the acquisition of Heron has allowed B&M to offer chilled and frozen food into 72 B&M stores. However, revenue weighting to low-margin FMCG products has knocked gross margins, which fell 69bps in the B&M UK business. A hike in dollar inflation also led to sluggish sales of general merchandise products, which were then put into clearance.
The future looks bright for B&M. The ‘moves’ across the retail sector, whether that is retailers downsizing or exiting the market, is freeing up much-wanted retail space for the discounter, particularly in currently underrepresented locations. The retailer is also opening a 1m sq ft distribution centre for the South in Bedford, designed to support its expanding store network for both B&M and Heron in the South. B&M is taking (the limited) opportunities to relocate small, low-contribution
stores to large sites; the discounter opened 47 new fascias this financial year, with a net of 8 relocations or closures, leaving a store estate of 576.
Excluding the Easter week, B&M UK like-for-like revenue grew by 3.1% in the first eight weeks of the current year, which is disappointing in light of the 4.7% like-for-like growth reported for 2017/18. But, perhaps to the dismay of the big four, there is no reason to doubt B&M’s unrelenting success through 2018.
Source: GlobalData 18 May 2018