The discount shopping chain is one of Liverpool’s biggest companies
B&M is one of the city region’s biggest employers
Liverpool discount shopping giant B&M Bargains says budget-conscious Christmas shoppers helped it boost sales in the festive “golden quarter”.
But despite that, shares in B&M fell by as much as 13% today due to concerns over an increasingly tough retail environment, as well as rising taxes and employment costs. In its third-quarter trading update released to the stock market today, Speke-headquartered B&M announced a group revenue rise of 3.5% year-on-year.
However, the growth was slightly less for B&M’s UK operations alone, with a 2.8% increase for the 13 weeks ending 28 December 2024. Sales at B&M’s discount grocery chain Heron Foods fell by 5.6% but group CEO Alex Russo insisted the business “remains undistracted by the current economic headlines.”
The ongoing sales growth may indicate that consumers are still feeling the pinch from the cost-of-living crisis and are on the lookout for cheaper products. Mr Russo said: “Our operating model is well set up to give customers exceptional value when they need it most.”
He added: “Pricing, availability, store standards and a disciplined opening programme will underpin positive volume growth across our ranges.” The most significant progress was observed within B&M France, which saw a quarterly increase of 12.5%, as reported by City AM.
The bargain retailer has revised down its previously disclosed profit guidance, now expecting it to be in the range of £620m to £650m. Mr Russo said: “Our strategy is clear – we are an everyday low-price discounter with a laser-focus in keeping excellence in retail standards and our costs the lowest.
“This allows us to drive volumes by offering our best-selling products at exceptional value to every customer. Through this volume growth, and with our leading return on capital business model, we continue to generate profit and cash returns for our shareholders.”
B&M opened 39 new stores in the first half of 2024, bringing its total to 764. It aims to operate 1,200 UK stores. B&M has announced a special dividend of £151m, equating to 15.0p per ordinary share.
David Hughes, a research analyst at Shore Capital, predicts that the coming year could be challenging for the retailer. “Overall, while the business has once again delivered on growth and showcased its high cash generation, it remains a challenging retail environment,” he said.
“Non-food deflation coupled with the wage and National Insurance cost increases expected in Spring will likely put pressure on margins, while growth remains dependent on new store rollouts.”
Just last month, B&M enlisted the boss of another iconic business as it grappled with a slump in its share price. Euan Sutherland, chief executive of Irn Bru maker AG Barr, is poised to become a non-executive director at B&M from January 20, subject to shareholder approval.