B&M Bargains has been a rare beacon of hope for the beleaguered UK high street, but investors gave the group’s annual results the cold shoulder this week despite its stellar growth.
B&M European Value Retail (BME) sales were up another 17.1% to £3.5bn in the year to 30 March and such is its recent growth that the chain has been linked with a takeover of Asda after the collapse of the latter’s merger with Sainsbury’s. B&M’s CEO Simon Arora dampened talk of an Asda approach on Thursday, saying the retailer “does not need” M&A to fuel growth, but investors were more concerned about signs of a slowdown in its core business.
Its UK business seemingly continues to go from strength to strength, with sales up 8.7% to £2.8bn as it benefited from 44 new net store openings in the year on top of the 39 opened in the prior year. Like-for-like growth was a more modest 0.7% compared with the 4.7% organic growth in the previous financial year, but like-for-like sales were back up 5.8% in the fourth quarter despite the lack of Easter trading.
However, its international business, which was added to with the acquisition of French business Babou in October, continues to disappoint. German arm Jawoll saw 6.7% revenue growth to £213.7m, but margins reduced as it continued to clear old slow-moving stocks and made an EBITDA loss of £10m.
Also, Arora tempered UK growth expectations, saying it “would be prudent to expect more moderate like-for-like growth in the full year”.
Retail analyst Nick Bubb noted: “No doubt the more helpful weather year on year has helped boost seasonal range performance, while the new overseas operations haven’t done much to help B&M, with Germany particularly disappointing.”
B&M shares fell 5% on Thursday to 361.2p and have slipped from a high of 436.4p in June 2018.
Elsewhere, Majestic Wine (WINE) shares were heading back in the right direction after it admitted it was in talks with “a number of parties” over the sale of its retail network. Reports this week suggested Majestic is closing in on a £100m sale of its entire UK estate, with private equity firm OpCapita named as a potential buyer.
The group said it had received a “number of expressions of interest” and would continue to “review all options” to raise capital from its retail and commercial businesses to accelerate growth of Naked Wines.
Majestic shares rose 5.3% to 280p on the news on Tuesday and were up 17.1% for the week to 287p by Thursday lunchtime.
Meanwhile, Britvic (BVIC) shrugged off the impact of the UK soft drinks levy after posting an 8.1% rise first half pre-tax profits to £45.2m on revenues up 4.9% to £733.2m.
The advent of the sugar tax has accelerate the consumer t4rend towards its core of low and no sugar brands, with Pepsi Max a standout performer and all three of its core GB stills brands in growth.
Britvic shares slipped back 1.3% to 926p on Wednesday, but remain up 15.2% year-on-year.