DISCOUNT homeware retailer B&M has said its “value-based approach” means it is well-placed to help customers weather the cost of living crisis.
It comes as the London-listed firm posted a six-month trading update that showed group revenues increased by 1.8 per cent against the previous year to £2.3 billion.
It reported adjusted earnings of £232 million against £282m for the same period the year before.
The business said trading has been good in the first six weeks of the quarter leading up to Christmas, with like for like sales up 2.5% in B&M UK stores.
Alex Russo, B&M chief executive, pledged he and staff will continue to support customers on pricing, saying “we will do our very best to help them weather the cost of living crisis”.
The company also said while new openings slowed since Covid it still plans to increase its number of outlets by 35% to 950.
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Group cash generated from operations was £370m, against £201m, with year on year growth of 83.3% reflecting “planned stock reductions and strong inventory controls”.
The retailer, which is Luxembourg registered with its UK headquarters in Liverpool, has stores across Scotland including in Glasgow, Edinburgh and Aberdeen.
Its UK business saw like for like revenues decrease by 3.9%. Second quarter revenues were up 2%, compared with a decline of 9.1% in the first quarter, which was affected by the strong seasonal sales in the first quarter of the previous year.
Sales increased by 18.2% in France, with all stores now under the B&M banner, and adjusted earnings of £18m against £11m last year.
Sales in Heron Foods increased by 14.6% as “consumers were attracted to convenience discount stores”, with adjusted earnings of £14m versus £13m the year before.
There were ten new B&M store openings in the UK and four in France, as well as seven in its Heron Foods division.
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Group statutory operating profit was £249m, against £283m, statutory profit before tax was £201m versus £241m, and statutory diluted earnings per share was 15.7p, set against 19p.
An interim dividend of 5p will be paid in December, which is the same level as the previous financial year.
It underlined previous guidance for the year of between £550m and £600m group adjusted earnings, ahead of the pre-pandemic level of £342m in 2020.
“Sales momentum is good as we enter a difficult period for the economy and consumers,” said Mr Russo. “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.”
Orwa Mohamad, analyst at Third Bridge, said: “B&M, and other value retailers, are benefiting from a whole category of consumers who are downgrading from the mid-market. However, B&M is also facing a decrease in average basket sizes and shopping frequency. This is putting their business model under pressure because bricks-and-mortar retail obviously requires high footfall and sales volumes.
“The margins of the value retail market will remain challenging due to inflation and elevating energy costs. But B&M is in a better position to withstand margin erosion than some of its competitors.”
Shares in B&M closed down 16.9p, or 5.5%, at 357.2p.
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