Following the release of B&M’s figures for the 26 weeks ending 23rd September 2023; Sophie Mitchell, retail analyst at GlobalData, a leading data and analytics company, offers her view: “After an incredibly strong Q1, with UK like-for-like (l-f-l) sales growth of 9.2%, l-f-l performance slowed in Q2 to 3.1%, hindered by unseasonably wet weather across the UK over the summer. However, this has hardly put a dampener on B&M’s impressive results this period, as its strong price position across both grocery and non-food has earned it the loyalty of consumers when their purchasing power has been dramatically cut by inflation and high interest rates. Crucially, B&M has delivered this growth profitably, with group adjusted EDITDA up 16.1% for its H1 FY2023/24 and has subsequently raised its guidance for adjusted EDBITDA for the year to between £620-£630m.
“B&M’s success has undoubtedly been aided by its aggressive store roll out in recent years, opening 28 new stores in its H1 FY2023/24, which will not stop anytime soon. The group has revised its guidance on its store rollout, stating that it will reach no less than 1,200 B&M UK stores alone in the next few years, ahead of its previous guidance of 950 stores. The group also recognises the opportunity in France, with five of the 28 new stores opened there. With a similar demographic makeup and population size to the UK, France represents a chance for the retailer to replicate the size and success of its UK facia in the region. The acquisition of 51 former Wilko stores will also aid its UK store expansion, which it plans to open steadily over the next 12 months, contributing to a total opening of no less than 125 stores in the UK over the next three years, taking the B&M proposition to more consumers across the country. Although it is still unknown which ex-Wilko locations B&M acquired, Wilko store locations were generally very accessible, a factor that appealed to its consumers; thus, these stores are likely to be beneficial to B&M by adding to its town centre locations and gaining market share through ex-Wilko shoppers.
“With no transactional website for its core proposition, the timing of B&M’s success coincides with the return to stores from consumers post-pandemic. However, investing solely in its estate, unlike rival Poundland, which opened a transactional website this year, will benefit B&M. The discounters’ offer of value products mean it often does not warrant a delivery fee for consumers, making instore shopping a preferred channel. There is a minimum spend of £20.00 on Poundland.co.uk, at which point delivery is a punchy £5.95. It will be interesting to see how this venture fares against B&M’s choice to focus only on an instore channel in the coming years.
“Although it is up against strong comparatives, the group is well positioned for its Golden Quarter, with B&M UK l-f-l growth already up 1.6% in the first six weeks to the 4 November 2023. B&M’s value offer will resonate well with consumers this Christmas, as heating bills add to an already constrained discretionary spend.”
