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Value retailer delivers half year sales growth; store openings slow

Value retailer B&M has reported an increase in half year sales driven by an improved second quarter performance with homeware ranges performing strongly.

According to its latest trading update for the 26 weeks to 24 September 2022, total group sales rose 1.8% to £2.3bn from £2.2bn, with Q2 sales up 6.3% compared to a 2.3% decline in Q1.

Group adjusted EBITDA resulted at £232m with a margin of 10%, down from £282m and margin of 12.4% in the prior year, driven by the reduction in gross margin but a strong increase compared to the pre-pandemic adjusted EBITDA figure in HY1 FY20 of £151m and margin of 8.5%.

B&M UK fascia revenue decreased by 0.9% to £1.8bn on prior year, with like-for-like revenues decreasing by 3.9%. However, Q2 LFLs were up 2%, compared with a decline of 9.1% in Q1.

B&M said continuity ranges such as homewares and home decoration continued to perform strongly and delivered high growth, which included the launch of its ‘Simply Everyday’ brand across its home range – reinforcing its entry price points.

In the core B&M UK business, 10 gross new stores were opened across the UK. There were four closures in H1 FY23, of which three were relocations, meaning that there was a net increase of three stores overall. New store openings slowed during the pandemic and lockdown, impacting the pipeline, but the retailer expects this to recover going forward.

On current performance, B&M said: “Trading has been good in the first six weeks of the Golden Quarter, with LFL sales up 2.5% in B&M UK stores and strong sell-through in non-grocery categories. We confirm previous guidance given of £550m – £600m Group adjusted EBITDA4, significantly ahead of the pre-pandemic level of £342m in FY20.”

Alex Russo, Chief Executive, added: “Sales momentum is good as we enter a difficult period for the economy and consumers. Our value-based approach is winning with existing and new customers, and we will do our very best to help them weather the cost-of-living crisis. We are well positioned as we trade through the Golden Quarter and our strategy remains unchanged – a relentless focus on price and product.”

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