B&M profits double as value retailer stays open during UK lockdowns

Pre-tax profit at value retailer B&M doubled in the year to March 27 but the group cautioned that same-store sales were likely to be negative this year, given the very strong comparatives.

Chief executive Simon Arora said “it would be prudent to assume there will be a modest decline” in profits as well and predicted “a year of consolidating market share gains rather than expecting further profit growth”.

He added that the outperformance — pre-tax profit of £525m was well ahead of the £470m that analysts had expected, according to S&P Capital IQ — was driven by an exceptionally strong end to the year.

The government’s decision to allow outdoor socialising from the end of March had pulled forward demand for garden furniture and accessories that would usually not appear until summer, he said. “You couldn’t get a fire pit for love nor money.”

The FTSE 100 group had already emerged as a relative winner during the pandemic as its 681 UK stores, mostly located in retail parks where shopper numbers have held up best, were permitted to remain open throughout the lockdowns.

It also benefited from a shift in purchasing from food and toiletries into higher-margin homewares. As a result, pre-tax profit was up 108 per cent at £525m and the final dividend was increased by 140 per cent to 13p a share. The group also paid out £450m of special dividends during the year.

Total sales rose almost 26 per cent to £4.8bn.

Arora, whose family still own 15 per cent of B&M, said the group planned to open about 45 more B&M stores this year as it heads towards a target of 950, and a smaller number of its food-led Heron convenience outlets.

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Trading was more challenging in France, where B&M is in the process of converting the Babou stores it acquired in 2018 to the UK format. Shops there had to close during lockdowns, though Babou made £11m of underlying profit against a £3m loss a year earlier.

The group is also contending with inflationary pressure in its supply chain, although Arora said B&M was “somewhat insulated by its size” and his family’s long history of directly sourcing products from Asia.

“Our buying power with both factories and shipping lines has insulated us from some of the wild fluctuations in prices,” he said. “We deal direct with over 300 factories and we have multiyear or multi-decade relationships with many of them.”

B&M shares were down 2 per cent in early trade on Thursday.

Liberum analyst Adam Tomlinson pointed out that the forecast sales decline was less than the 7 per cent that analysts had been expecting.


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