B&M bucks retail blues as full-year profits jump

The value retailer claimed its model is “highly relevant” for today’s challenging backdrop as it posted a 25% jump in pre-tax profits to £229.3m.

On an underlying basis, pre-tax profits increased by 16.5% to £221.5m.

Group sales rose 22% to £2,976.3m in the 53 weeks to March 31, while UK like-for-likes advanced 4.7%.

The retailer, which opened 39 new stores during the period, plans to open at least another 45 this year as it benefits from the availability of “attractive new store opportunities”. 

Chief executive Simon Arora told Retail Week that the value retailer, which aims to have a 950-strong UK store network in the coming years, would fuel it’s expansion with a 50/50 split of purpose built new stores and “repurosed vacant stores from retailers in distress”.

Arora added that the spate of CVAs in recent months had meant the UK retail property sector was “a buyer’s market” for firms looking to expand.

B&M said Heron Foods, which it acquired eight months ago, has delivered an “excellent” performance, generating £11.7m EBITDA and enabling the introduction of frozen and chilled foods into 72 B&M stores so far. 

The value retailer is also ploughing over £100m investment into developing a 1 million sq ft distribution centre in Bedford which will be operational in 18 months and fuel B&M and Heron Foods respective store expansion in the South East.

The firm has struggled in its German division, however, where adjusted EBITDA slumped 52% to £5.6m. It said it is “learning the lessons in Germany with rapid pace of transition towards the B&M model under the new Jawoll management team”.

Arora said the retailer would bolster the performance of its German subsidiary by implementing the same direct sourcing structure that is used by B&M.

It also said that its fourth quarter had been “disappointing” as inclement weather knocked trade. 

Arora said B&M delivered another strong set of results by “doing what we do best, which is providing great value week-in, week-out on the things customers buy regularly for their homes and families. 

“The B&M model is highly relevant for the current difficult economic environment with its strong position in the value and convenience areas of retailing where physical stores are winning. 

“The business is well placed for continued profitable, long-term growth. In a retail sector beset by structural challenges B&M’s unique, disruptive model stands out as a success story.”

Commenting on current trading, the retailer hailed a “pleasing start” to the year, with UK B&M like-for-likes up 3.1%, excluding the week of Easter.