Bargain hunters help B&M European Value Retail SA (LON:BME) deliver a trolley full of exceptional results
Q1 2021 hedge fund letters, conferences and more
B&M European Value Retail's Q1 Earnings
"Bargain hunters and lockdown shoppers have helped B&M European Value Retail deliver a trolley full of exceptional results with pre-tax profits more than doubling to £525.4 million.
Being classed as an essential retailer in the UK was a big bonus for B&M as customers starved of retail therapy elsewhere could browse the aisles not just for food, but also big ranges of gifts and household goods. This helped UK sales rise by almost 30% over the year. With the tills ringing merrily, there was no need for further discounts and the red sales stickers hardly got a look in, boosting margins by 4% to 13%.
The company is now on a conveyor belt as far as its new store roll out is concerned, to try keep up with its customers insatiable demand for bargains. It’s creating 7,200 new UK jobs and has opened 25 net new stores over the year with yet more planned.
Now that other retailers have been able to fully open up once more, competition will undoubtably be tougher and matching these bumper results as normal trading conditions resume will be a challenge. The company says trading is likely to be volatile and so far, sales during the first 9 weeks of the current year have been down by 1%.
But part of B&M’s strength lies in the location of its stores, mainly in retail parks out of town where footfall has rebounded much more sharply than in high street locations. Its ‘pile it high sell it cheap mantra’ is also likely to continue to be a big draw for shoppers while economic uncertainty remains as consumers usually opt for value brands when times are tight.
It’s bonus time all round at B&M with staff receiving extra payments as a reward for how they rose to the challenge during the pandemic. The final dividend is recommended to increase by 140% to 13 pence a share, bringing the full year ordinary dividend to 17.3 pence per share, at the top end of the pay-out policy.’’
Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
About us
Over 1.6 million clients trust us with £132.9 billion (as at 30 April 2021), making us the UK’s largest digital wealth management service. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.
