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Discounter B&M Benefitting From Out-Of-Town Footprint, Wide Category Range

Published on Sep 30 2020 8:58 AM in Retail tagged: Trending Posts / GlobalData / AJ Bell / B&M European Value Retail / B&M Stores

Discounter B&M Benefitting From Out-Of-Town Footprint, Wide Category Range

Discounter B&M European Value Retail benefitted strongly from its portfolio of stores in retail parks and out-of-town locations during the COVID-19 pandemic, a leading industry analyst has said.

Russ Mould of AJ Bell was commenting following the announcement that B&M posted group revenue growth of 25.3% in the first half of its financial year, with its UK stores seeing like-for-like growth of 23.0%.

'Well-Positioned'

“The latest update from B&M European Value Retail confirms it is well-positioned for tougher economic times," Mould commented. "When people are feeling the pinch they tend to trade down from more expensive shops and products to the sort of value proposition that B&M offers.

“Geographically too, the business is in a good spot – it doesn’t have lots of big destination city centre stores that would have been heavily impacted by a working from home inspired drop in footfall. Instead it occupies sites in smaller shopping centres and retail parks as well as local high streets.

“And any reduction in footfall has been more than made up for by people cramming more into their baskets."

The fact that the business has raised its earnings guidance is "quite the coup", Mould added, and is likely to lead the retailer to consider 'what's next', including a potential tie-up with Asda.

"Amid an apparent takeover of Asda, very much the stepchild of US grocer Walmart’s portfolio, there has been some speculation that B&M might be a good merger candidate for Asda in the medium term," he added.

“Given both operate towards the discount end of the market, there could be logic to such a tie-up, particularly given Asda doesn’t currently have any real local, convenience store presence and B&M has just such an offering with its Heron Foods arm.”

Wide Range

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Elsewhere, Amy Higginbotham, retail analyst at GlobalData, noted that B&M's value proposition "appeals amid economic uncertainty", while its wide range across a number of product categories has served it well.

"[B&M] was able to capitalise on strong demand for tinned and packaged food, as well as DIY and gardening products as consumers stayed home," she said.

The performance is even more remarkable given the fact that B&M doesn't operate a transactional website, Higginbotham added.

"B&M is wisely reviewing its store portfolio," she said. "It opened nine new stores in the UK during the six-month period, but closed eight smaller and older stores.

"Store openings will pick up over the next six months, with plans to open between 40 and 45 stores during FY2020/21, despite the ongoing impact of COVID-19 on physical retail.''

© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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