Interview Synopsis

B&M – strategic business review, lockdown implications & medium-term growth outlook

  • Public Equity
  • Consumer
  • Europe

B&M stores are “in a bit of a purple patch”, having benefited from changes in consumer behaviour during the COVID-19 pandemic, a former director at Poundland Ltd told Third Bridge Forum. 

Positive medium-term outlook for B&M

The Interview started with a look at the health of UK variety stores and discount retail before the coronavirus outbreak. As a footfall-driven industry, it was a “benign market”, he said, with low footfall and low like-for-like growth.

News of an impending lockdown triggered a burst of panic buying, followed by sharp declines in sales and footfall. However, as of mid-April, a common characteristic across retailers has emerged: footfall has waned but spend has increased. 

“Their [B&M’s] footfall is down generally by about 10%, 8-10%, but their average transaction value has gone up by 30% or more just on like-for-like sales, therefore net-net high 20s in terms of like-for-like growth,” the specialist said. He also outlined the factors that have given B&M an edge over its competitors. 

It has been a banner year for the company, but whether this growth is sustainable was up for discussion. Indeed, “it’s more reasonable to use 2019 as a base year for 2021,” the expert said. “They’ll be up against eye watering like-for-like comparators from next April onwards, so I can imagine, from the second half of next year, they’ll be… in negative like-for-like territory.”

The Interview’s focus then shifted to the strength of B&M’s product portfolio, with chilled and frozen goods being revealed as the company’s biggest opportunity. “They’re very good at seasonal, they’re very good at gifting, and they’ve got a compelling offer, so there’s no obvious signs of weakness.”   

Potential pricing challenges over the next year or so were also on the agenda, with Brexit highlighted as a risk given that some 35-40% of B&M’s products are sourced from outside the UK. It was also noted that “FMCG suppliers are trying to force through some price increases due to COVID-19”, while product development has also taken a back seat.

The Interview also covered B&M’s plan to open new stores, as well as what a recession could mean for the company, and its online strategy.

To access all the human insights in Third Bridge Forum’s B&M – strategic business review, lockdown implications & medium-term growth outlook Interview, click here to view the full transcript. 

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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