B&M ‘well placed to weather Covid-19 storm’ as profits and sales rise

Discount retailer B&M has said it is better placed than many rivals to weather the Covid-19 pandemic as it posted a rise in annual profits and surging sales amid the lockdown.

The group saw annual pre-tax profits lift 3.2% to £252 million for the year to March 28, with sales since then rocketing thanks to strong demand for DIY and gardening products.

It revealed late last month that UK like-for-like sales raced 22.7% higher in the eight weeks to May 23, though it cautioned trading is unlikely to continue at the same pace as much of the rise was due to demand being brought forward amid the hot weather.

B&M was able to continue trading throughout the lockdown due to its sales largely falling within the essential categories of groceries, pet care, DIY and personal and household.

It said plans for new stores would be slowed this year and possibly next by the pandemic as it impacts construction work, but it confirmed it still has aims for another 30 in 2020-21 and stuck by its long-term target for at least 950 stores in the UK.

The firm, which has 656 outlets in the UK as well Heron Foods stores and the Babou chain in France, said it is well placed to weather the crisis, thanks in part to its out-of-town store base.

B&M chief executive Simon Arora said: “For many retailers, the outlook in the Covid-19 world is more about survival than it is about the shape of the year ahead and beyond.

“B&M has significant advantages – the ‘variety retailing’ model with its core strength in everyday essentials, a well-invested infrastructure, strong value credentials, a modern and convenient store network with continuing growth opportunities in the UK and France – mean that the business is better positioned and more resilient than most to deal with the new realities.”

The group saw like-for-like revenue growth of 3.3% over the year, including 6.6% in the final quarter amid panic-buying as the Covid-19 crisis deepened.

It said it saw two weeks of “exceptional” demand in March ahead of the lockdown, adding that sales would have been 1.7% higher with this period stripped out.

B&M said it has given staff a pay rise – at 110% of their normal salary – in view of the extra workload and increased responsibilities amid the crisis.

It said higher costs from the pandemic, including social distancing measures, and losses due to the lockdown closures of Babou in France partially offset the recent sales boost.

Shares fell 7% after its full-year results, having risen strongly in recent months.

Anubhav Malhotra, an analyst at Libeum, said: “There is clearly still uncertainty for the year ahead and normalised trading remains difficult to predict.

“However, B&M has been in a good position to capitalise on consumer demand during the Covid outbreak and the strong start to the year is very encouraging.”