B&M’s store opening spree drives growth
AN aggressive ramp-up of its stores opening programme has boosted profits at discount retailer B&M Bargains, but the Liverpool company said its major investments in shops and two new distribution centres had impacted like-for-like growth.
B&M’s results for the 26 weeks to September 26 showed revenues rocketing to 25.8% to £930.3m. Growth was driven by 47 net new stores opened in the UK, while like-for-like sales were up just 1.2%. The pace of growth was more than twice that seen in the first half last year, when 20 stores were opened.
The retailer now has 479 stores in this country and 54 in Germany, which trade under the Jawool brand. Its goal is for at least 850 UK stores.
Adjusted ebitda increased by 18.6% to £86.6m, while pre-tax profits surged 25.4% to £66.4m. In line with this B&M hiked its dividend by 77.8% to 1.6p per share.
During the period B&M opened two additional distribution centres, in Runcorn and Middlewich, totalling 800,000 sq ft. The investment in this and in store openings saw capital expenditure leap from £12.4m in the first half of 2015 to to £32.1m.
Chief executive Simon Arora said: “”Our unique retail model continues to deliver strong revenue growth as we extend our geographic footprint. In the UK, our teams have opened 47 new stores in just 26 weeks – a record rate of openings for B&M.
“The business is growing at an annualised rate of over £400m per year, which brings its own operational challenges. However, the investment made in our supply chain infrastructure and in other core functions will support the next stage of our expansion.”
Addressing some of the challenges of the company’s rapid growth, he added: “The accelerated scale of growth and investment has had some challenging short-term consequences operationally. Our UK new store programme has been larger in recent months than we had originally planned for, and, given the introduction of the two large new distribution centres during the period, we have experienced below-normal service levels to stores as we approach peak trading. This will have a short-term impact on overheads and in-store product availability.”
Chairman Sir Terry Leahy said the company had made “good progress” and is “well prepared for the rest of the year”.
Looking ahead Simon Arora said: “We are confident both in the full year outlook and in the longer term potential for our unique retail model as we continue the roll out of our store estates in the UK and Germany.”
