B&M reports strong start to the year

Lucy Ingram
Retail Analyst
@RetailAnalysis

Date : 29 May 2020

B&M has released an unscheduled trading update for the 13 weeks ending 28th March (Q4) and the first eight weeks of the 2020/21 financial year to 23rd May 2020. The retailer saw strong like-for-like sales growth across this period, according to Retail Gazette.

Performance driven by grocery, gardening and DIY

  • +6.6% B&M UK like-for-like sales in Q4
  • +22.7% B&M UK like-for-like sales in the first 8 weeks of the financial year
    • This was mainly driven by a strong performance in gardening and DIY, if these categories were excluded, like-for-like sales would be +10.3%

Heron Foods has also seen strong performance in both periods, however an official growth figure has not been released. Figures for international performance have also not been released.

B&M has said shoppers have been visiting stores less frequently, but their average spend has been much higher. Results were driven by strong performance in grocery in March, and the warm spring period in April.

Rebounding from a slow end to the year

These results follows on from a slower Q3 (29th September 2019 to 28th December 2019) when B&M saw positive growth across the majority of its business, but minimal like-for-like growth in the UK. B&M UK's positive results were driven by new store openings, with 12 net openings in the quarter. Performance was slower than anticipated in the run-up to Christmas, with like-for-like growth at only +0.3%.

In March, B&M sold its German business, Jawoll due to continued disappointing performance.

What does the future hold? 

AAlmost all of its estate is now fully operational. B&M had previously closed 49 stores in the UK due to the outbreak, they have all now been re-opened. All but two of the Babou stores in France have now re-opened.

The company has said it does not expect this high level of growth to continue. As demand eases the retailer may be challenged by its higher than normal operating costs in distribution and at stores due to the introduction of social distancing measures and the higher wage costs during the peak of the pandemic.

We expect to see B&M continue to increase its grocery range as planned, following on from this period. This will be a trend seen across other variety discounters such as Poundland, who announced it would be rolling out its new chilled and frozen range to more stores in March. By adapting the grocery assortment to appeal to a broader shopper base and aligning with new buying behaviours this will drive future growth, helping the variety discounters to increase basket size and drive frequency of visit.

Looking for more insight?

B&M will release its preliminary results for the 2019/20 financial year on Thursday 11th June, look out for our coverage of the results soon after.

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