Strong first half revenue growth at discount retailer

B&M has shown “strong profitable trading momentum” in the first quarter of its current financial year.

Sales for the 13 week period from 26 March 2023 to 24 June 2023 show revenue growth of  13.5%, which it says are in line with internal expectations.

In a brief trading update to the market this morning (29 June 2023) the board noted grocery and general merchandise has performed well on a like for like basis and that stock levels were being well managed.

The company recorded sales of £1,318m compared to £1,161m for the same period last year, a rise of 13.5%.

Alex Russo, Chief Executive, said: “Our strong trading momentum demonstrates the strength of our unchanged strategy to relentlessly focus on price, product and excellence in retail standards.  The business is well positioned as we start to transition to our autumn winter season.  We will continue to work hard to help all our customers manage the cost-of-living crisis.”

Russ Mould, investment director at Manchester investment platform, AJ Bell, said: “B&M is the ultimate play on the cost-of-living crisis, offering a range of goods at cheap prices. Chief executive Alex Russo says the business has ‘strong trading momentum’ which is no wonder when interest rates keep going up.

“A lot of people are feeling the pinch of the higher cost of borrowing and are looking for ways to trade down to cheaper items for the things they need in the home. This is not simply a pound store offering, B&M is a place for people to buy things like garden furniture, desks and kettles.

“Argos used to be seen as the go-to place for such items, but it feels like B&M has taken over as the public’s favourite places to buy known brands at cheaper prices. Argos has suffered from its shrinking high street presence while B&M’s expansion has put its stores front of mind for the shopper.”

He added: “This should provide long-lasting benefits. Even when the cost-of-living crisis fades away, B&M, in theory, should be able to keep many of the customers it won during the tougher economic times, particularly if it continues to offer good for value for money.

“Yes, some people will naturally trade back up to more expensive places when the economy is stronger, but the fact the current crisis could last well into 2024 suggests that many shoppers will become so used to visiting B&M that their shopping habits become ingrained.

“So why has the share price fallen six per cent on the news? It could be the lack of full-year guidance which implies no upgrades to earnings expectations. The shares have already had a strong run this year, up more than 30%, so perhaps some investors are banking profits while the going is good.”