B&M has revealed positive sales and profit figures for the 52 weeks to 26 March 2016 as well as record store openings, making it a successful year for the discounter.
UK LFL sales up 0.3% as turnover exceeds £2bn
Total sales for the business in 2015/16 exceeded £2bn for the first time, up 23.6% year-on-year to £2,035.3m. Positive like-for-like sales at 0.3% - 2.4% on an underlying basis - indicates strong trading, particularly when compared to thenegative LFL sales that the biggest players in the grocery market have recently reported in their own 52 weeks results. Profits also showed encouraging growth with an increase of 16.2% to £202.5m in operating profit at group level.
Record number of store openings
The last store opening of the year was in Mansfield, Nottinghamshire, marking the retailer's 500th store. With a record of 79 new store openings in 2015/16 as well as a some closures, B&M ended the year with 499 UK stores. While the store growth has been put down to the the attractive sites on offer, B&M has no plans to replicate this rate, instead looking to open c.50 stores each year for the next few years. The discounter has outlined plans to expand the UK estate to 850 stores, making significant investment in two new distribution centres last year to fulfil this ambition.
German expansion of Jawoll
B&M is also investing in its German chain, Jawoll, which it acquired in 2014. Turnover is showing positive signs of growth, fuelling the retailer's decision to expand further with 10 new stores in 2016/17. Last year, six new stores were opened, including a new smaller format which is proving to work well. To serve this store growth, an extension of the existing distribution centre is underway with completion due in June 2017.
What do we think?
B&M's performance shows how despite the challenging market conditions in the UK, its discount concept has been able to remain successful. Keen to distinguish itself from other discounters and create a strong customer proposition, B&M is focusing on growing its non-food categories which is the right strategy for B&M as this is where the majority of sales are. By introducing products by Black & Decker and Dulux, B&M is able to maintain its focus on brands, however in order to achieve a good, better, best range, private label growth is also a key consideration to hit lower price points and deliver wide appeal.
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|Priya Chandarana is a Retail Analyst at IGD, specialising in research on the growing UK discount channel. She brings food and wine retail and PR experience to IGD. To learn more about how IGD's research can benefit your business further, please get in touch.|