Following today’s release of B&M Q1 figures for FY2019/20, Matt Walton, senior retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘B&M’s strategy of low prices and convenience continues to resonate with shoppers as its UK fascia’s sales grew by 13.8% to £738.9m. This growth was driven by the net opening of 12 stores during the period but was also supported by better than expected l-f-ls of +3.9% as it continued the momentum it started in Q42018/19, when it recorded a 5.8% uplift. Seasonal products and homewares were the star performers, with homewares performing especially well having improved its visual merchandising and focussed on more trend-led products. While not as strong as B&M, its convenience grocery fascia, Heron Foods, started FY2019/20 well with sales up 8.1%, driven by six new outlets and l-f-l growth.
“Revenue through its German operations, Jawoll, also increased, up by 1.9%, but its performance was dampened by negative l-f-ls, as it struggled against a strong comparative in April, while its warehousing and logistics costs remained high. This sluggish performance in Germany is concerning: CEO Simon Arora tried to reassure investors that the changes to the product offer of both Jawoll and the more recent acquisition Babou in France were taking shape as it applies to the B&M model to both businesses, but B&M has owned Jawoll since 2014, and such a transition should have been long completed.
“B&M’s prospects remain positive, as it is set to open a net of 45 stores in the UK in FY2019/20, it will continue to benefit from consumers remaining cautious and is still on course to record profit growth, despite the drag caused by Jawoll. However, the level of competition B&M faces remains fierce. Both B&M and Home Bargains have aggressive expansion plans, which will inevitably dampen sales growth for both, and as B&M grows its presence within chilled and frozen food it will be competing more directly with Aldi, Lidl and The Range, who have partnered with Iceland in some stores.
“B&M’s FY2019/20 performance will continue to be buoyed by its enhanced homewares offer, as it goes up against a soft l-f-l comparison, and it should aim to incorporate elements of this refresh across its other ranges to help B&M stand out.”