B&M: Festive season of bargain shopping helps ‘undistracted’ value retailer
Value retailer B&M Bargains reported strong revenue growth throughout the golden quarter as consumers sought out low-discount options to meet their festive shopping needs.
However, the caution imposed by a challenging environment ahead for the retail sector due to tax hikes and employment costs caused B&M shares to fall by 8.5 per cent today.
In a third quarter trading update to markets today, the Liverpool-based firm, which includes Heron Foods, said group revenue was up 3.5 per cent year-on-year.
That number fell for B&M’s UK arm alone, however, with only a 2.8 per cent growth for the 13-week period between 29 September and 28 December 2024.
B&M’s bargain supermarket chain Heron Foods was also down 5.6 per cent, despite the group’s chief executive Alex Russo ensuring the business “remains undistracted by the current economic headlines.”
A continued uptick in overall revenue, as also highlighted in a trading update in November, could be a sign consumers haven’t fully recovered from the cost-of-living crisis and are still seeking out cheaper goods.
Russo said: “Our operating model is well set up to give customers exceptional value when they need it most.
“Pricing, availability, store standards and a disciplined opening programme will underpin positive volume growth across our ranges.”
The positive momentum was most seen within B&M France amid a quarterly growth of 12.5 per cent.
B&M also declared a £151m special dividend of 15.0p per ordinary share. The ex-dividend date is set for 16 January, with further returns set to be finalised in the new financial year.
Challenges ahead
David Hughes, research analyst at Shore Capital, believes the next year might be tough for the retailer.
“Overall, while the business has once again delivered on growth and showcased its high cash generation, it remains a challenging retail environment,” Hughes said.
He added: “Non-food deflation coupled with the wage and National Insurance cost increases expected in Spring will likely put pressure on margins, while growth remains dependant on new store roll outs.”
The bargain retailer, however, announced the lowering of its previously disclosed profit guidance, now expecting it to be in the range of £620m to £650m.
“Our strategy is clear – we are an everyday low-price discounter with a laser-focus in keeping excellence in retail standards and our costs the lowest,” Russo said.
He added: “This allows us to drive volumes by offering our best-selling products at exceptional value to every customer.
“Through this volume growth, and with our leading return on capital business model, we continue to generate profit and cash returns for our shareholders.”
New year, new beginnings
B&M opened 39 new stores in the first half of the year, bringing its total to 764. It said it aims to operate 1,200 UK stores.
However, the year has still proved tough for the bargain retailer amongst a number of pressure on incomes and higher tax burdens.
Euan Sutherland is set to become a non-executive director at the Liverpool-headquartered company from 20 January, 2025, subject to shareholder approval.
If appointed, Sutherland will also join the remuneration and nomination committees.