B&M hits the ground running as sales and earnings leap

DISCOUNT retailer B&M Bargains revealed strong first half results and said it would continue to roll-out its store opening programme, creating 2,500 jobs in the current financial year.

The Liverpool-based group, which floated in June, said it now has 400 UK stores, a number which it plans to swell to 850.

During the 26 weeks to September 27 B&M opened 20 new stores and said that another 30 will follow in the second half. The company has been linked with buying a number of unwanted Homebase stores, but no specific reference was made in the interim statement.

Like for like sales werte 4.8%. Total revenues, including new stores and a five month contribution of £58.8m  from German business Jawoll were £739.8m, an increase of 29.7% on first half of 2013.

Reflecting 0.8% growth in gross margin to 34.7% B&M said underlying EBITDA
soared 34% to £73m, up from £54.5m in the prior year and inclusive of £7.0m contribution by Jawoll Germany.

The retailer said the increase in gross margin was attributable to a successful summer season with less markdown activity and better sell-through on non-grocery categories.

During the first half the company said it has strengthened its infrastructure which included building a new 500,000sq ft distribution facility in Speke, Liverpool, which is already up and running and performing well.

B&M said it would pay a maiden interim dividend of 0.9p per share.

Chairman Sir Terry Leahy, said of the results: “B&M has delivered good momentum in sales, profits and cash generation during the first half whilst at the same time pushing on with rapid store rollout and investing in new infrastructure and team capability to support this long-term growth.

“The business is well-positioned as the leading limited assortment general merchandise discounter in a growth sector which offers scope for it to at least double in size in the UK alone over the next few years – and we are making good progress towards that objective.”

Chief executive Simon Arora added: “I am delighted to report that our maiden first half results are in line with expectations for both our UK and our German retail businesses.

“Our unique variety retailing model continues to appeal to shoppers, who are drawn by our broad spread of products and exceptional value for money. We remain very pleased with our new store programme, which is delivering healthy earnings growth and exceptional returns on capital.

This financial year we plan to create 2,500 new jobs in the UK. We remain confident that we can increase our store base from 400 stores to our stated goal of 850 stores in the UK.”

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