City round-up: B+M; James Fisher; Sosandar; Moneysupermarket.com
Discount retailer B&M saw revenues soar by 10% to £5.5bn in a trading update announced to the stock market this morning, which included a very strong Christmas and Easter in this year’s figures.
The Liverpool-headquartered business opened 47 new B&M UK new stores, two more than planned including those Wilko stores acquired in the year, which are performing ahead of expectations
The company expects to make adjusted EBITDA (pre-IFRS 16) of £629m, at the top end of the predicted £620m-£630m guidance range.
Alex Russo
Alex Russo, Chief Executive, said: “The Group has performed well in the year delivering strong operational execution. We serve our customers through a relentless focus on everyday low prices (EDLP), great product ranges and excellence in operational standards. This delivers profitable, cash generating growth for our shareholders. The business and team are well set up for the year ahead, our pipeline remains on track to open not less than 45 UK B&M stores in each of the next two financial years and our French and Heron businesses continue to demonstrate significant profitable growth potential.”
Danni Hewson, head of financial analysis at Manchester investment platform, AJ Bell, said: “The demise of Wilko should have benefitted B&M over the past six months as a key competitor was removed from the market. The jury is still out as recent performance has been disappointing.
“On one hand, guidance for adjusted earnings to come in at the top end of previous guidance is vindication that B&M’s strategy plays well to an uncertain economic backdrop. Its products are affordable and when consumers are watching every penny, value propositions shine through and through.
“However, B&M’s performance is not quite as solid as you might think. It’s clear that an earlier than normal Easter has pulled forward some sales which might have normally occurred in early April, outside of the trading period being reported. Had it been a ‘normal’ Easter date, it seems as if B&M’s trading update might not have been so bullish.”
She added: “Even with the Easter boost, fourth quarter UK like-for-like sales growth of 2.9% looks pedestrian. It implies that the company is finding it harder to keep churning out the success that has made it one of the big retail winners over the past decade.
“While the company continues to find ways to expand its store estate and plant flags in more territories, the competition is heating up with many other retailers and grocers offering more value-priced products with great success.
“Alex Russo has been in the top job for nearly two years and nothing radical seems to have changed about the business. He’s certainly kept the ship steady, but perhaps it’s time for more innovative thinking.”
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Jean Vernet
Barrow-headquartered Maritime group James Fisher has revealed pre-tax losses for the year of £62.3m.
On higher turnover of £496.2m the chief executive of the 175-year stock market listed group admitted 2023 was “a mixed year” with “unexpected challenges” but said the company had good progress in building the leadership team, implementing a new operating model.
The lengthy commentary reported to the stock market this morning revealed that the “complex divestiture” of the group’s nuclear business impacted the refinancing of bank debt during the first quarter which had a “significant short-term impact” in terms of resources, distraction, and costs.
A new chief financial officer, Karen Hayzen-Smith, will upgrade of control and risk management processes.
Jean Vernet, Chief Executive Officer, said: “We are now one year into our transformation programme to build a stronger, more cohesive company. Despite a number of challenges early in the year, we have made good initial progress in building our leadership team, implementing our new operating model and deploying our focus and simplification agenda.
“This includes significant progress to focus the Group’s portfolio around our core as an engineering services company, operating in the Blue Economy. We have divested non-core businesses, and more recently, announced the sale of RMSpumptools, which will significantly reduce our debt and create a stronger financial foundation for growth.
“I am proud of what we are achieving through Business Excellence. We are driving a step change in our safety culture, delivering greater efficiency through the deployment of Lean Six Sigma across our Product Lines, and we are launching a Project Management Office to improve operational execution. These initiatives will underpin our operational and financial performance and enable our Divisions to deliver the very best service to our customers.
“In the current financial year to date, the Group’s overall performance has been in line with the Boards’s expectations, building on our early-stage progress in 2023. Looking forward, we continue to see supportive end markets in 2024 in the majority of our businesses and would also expect to deliver further benefits from our turnaround initiatives.”
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Ali Hall and Julie Lavington
Wilmslow-based online women’s fashion brand, Sosandar, said it delivered a “robust” financial performance for the full year, delivering a profitable second half.
In a trading update for the year to March 31, 2024, the business, founded by co-CEOs Ali Hall and Julie Lavington, has seen a nine per cent increase in revenues of £46.3m.
And, as a result of a substantial positive swing in pre-tax profit from the first half (£1.3m loss) to an expected profit of £1.1m in the second half, the full year for 2024 will be broadly in line with market expectations – currently revenue of £46.8m and PBT of £0.1 m – with a marginal loss of £0.2m expected to be reported for the year overall.
Strong cash generation in the second half resulted in an improved net cash position of £8.3m as at March 31, 2024 (£7.7m as at December 31, 2023)
Post year-end, April trading has been strong with continued improvement in profitability driven, in particular, by gross margin.
Sosandar said the significant improvement year-on-year reflects its strategic decision to introduce a more targeted approach to price promotional activity ahead of select store openings, resulting in less frequent and less deep discounts.
Substantial progress towards opening the company’s first stores has been made, it said, with several shops identified in top tier locations at various stages of progression, including some now reaching the latter stages.
The exact timing of first openings will be determined by a disciplined approach to ensuring ‘right price, right location’ and that all other aspects are in place to deliver a fantastic in-store customer experience. Overall, the company said it is on track with all elements to execute the store roll-out as expected.
The roll-out will be delivered entirely from existing financial resources.
The planned roll-out of its multi-channel model is specifically designed to deliver profitable growth and accelerate delivery of the medium term target of £100m+ revenues and a 10% margin.
Ali Hall and Julie Lavington said: “We have delivered a robust financial performance for FY24, delivering a profitable second half, accelerating revenue growth whilst at the same time growing our margin and generating cash. This performance has been achieved against one of the most challenging backdrops our industry has experienced and is testament to how our customers feel about our on-trend, affordable, long lasting, lifestyle appropriate clothes.
“We enter the new financial year well placed, with a strong cash position in order to execute the next stage of our growth strategy. April trading has been strong with continued improvement in profitability driven, in particular, by gross margin. We fully expect that we will deliver more milestones in FY25 as we open our first physical retail stores and continue to take the Sosandar brand to more customers across the UK and worldwide.”
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Comparison website, Moneysupermarket.com, has achieved an eight per cent increase in first quarter revenues, it revealed in a trading update this morning.
The group, based in Ewloe, near Chester, said it saw continued strong growth in the insurance sector, which has seen fierce interest in switching due to higher than average increases in car and house insurance.
Insurance generated £61.4m of Q1 turnover, up from £50.6m at the same period last year, which was a 21% increase.
Travel saw a 10% increase to £6m in revenues, cashback revenues of £15.2m represented a one per cent improvement, while £8.8m from home services was an eight per cent decline, and money suffered a three per cent fall in turnover, at £26m. Moneysupermarket said there were fewer attractive banking offers at the start of the year compared with Q1 2023.
Inter-vertical eliminations – the removal of transactions between subsidiary companies in a group – showed a £2.8m deficit, representing a 130% fall in figures, giving a combined total revenue figure for the quarter of £114.6m.
The group said it saw continued growth in its SuperSaveClub member numbers, its loyalty and rewards programme launched in September 2023.
It now has more than 300,000 members and has expanded to 10 products. Compared with traditional MoneySuperMarket visitors, club members to date are purchasing more products, and are more likely to come to the business directly than through paid sources.
Looking ahead, the board said it continues to anticipate that adjusted EBITDA for the year will be in line with current market expectations, which are £139.8m of adjusted EBITDA for 2024, with a range of £133.7m to £143.7m.
CEO, Peter Duffy, said: “Our mission is to help households save money. We are delighted to see momentum in SuperSaveClub continue, with more customers able to save more money across more products. By helping UK households save on their bills, we create sustainable and profitable growth for the group.”
Danni Hewson, head of financial analysis at Manchester investment platform, AJ Bell, said: “In this kind of environment there’s a real need for people to make savings where they can and Moneysupermarket is heavily plugged into that trend.
“The insurance sector is still the shining light for the business but there were reminders the comparison site space remains competitive – with this most clearly reflected in the travel sector.
“A lack of attractive deals in its money segment saw the business slip from where it was a year ago as customers have less incentive to switch.
“Energy is still immaterial compared to what it was historically. Despite the drop in energy costs from their highs two years ago, switching provider is unlikely to create a meaningful cut to household bills.”
She added: “Moneysupermarket’s diversified model is a strength and the company is still likely to be in strong demand as people look to make every penny count.”
