In its first set of results since flotation in 2014, UK variety discount retailer B&M has announced full year figures for 2014/15, with sales in its core UK chain up a massive 20.0% to reach £1,526m. Including its German business (Jawoll) acquired during the year, total group sales were £1,647m. Profitability was also up: operating profit grew by 33.6% at group level to £174.2, as gross margins improved to 34.6% and operating margin to 10.6%.
Driven by strong store opening programme
B&M added 52 new UK stores over the year (54 openings offset slightly by two closures), increasing its total to 425 and providing a a £110m boost to sales. In addition like-for-like sales were also solid, up 4.4% well ahead of many mainstream competitors. However, like-for-like growth slowed in the second half of the year, dropping to 3.4% in the fourth quarter owing to the impact of deepening deflation in the UK market, especially across food categories.
Integration of Jawoll progressing
B&M acquired German chain Jawoll in April 2014, including 49 stores trading in a similar variety discount position to its UK chain. Generating total annual sales of some £130m, these stores offer similar performance to its UK stores, and B&M has begun investing in the infrastructure of its German business, and has launched two trial stores in a new size format, with the aim of driving faster expansion in this underdeveloped segment of the German market.
Big expansion plans going forward
With its broad mix of categories across food and non-food, B&M sees substantial opportunity for future growth across a total UK market it values at some £280bn, in which its share is currently only 0.5%. It aims to sustain a high rate of growth in 2015/16, adding 60 net new stores in the UK alone and maintaining its focus on developing its differentiated positioning with more efficient sourcing and private label development.
The voice of discount in The Big Debate
The fast-growing importance of discount will be a key theme at IGD flagship industry event, with both Jim McCarthy of Poundland and Joe Morris from Home Bargains on the programme: