The discount retail chain B&M has revealed a bumper Christmas trading period as cautious shoppers looked to save money.
Sales rose 7.2% at the group’s UK established stores in the 13 weeks to Christmas Eve, with 1.1% of that lift coming from an extra day of trading. The company said underlying growth had increased thanks to strong seasonal product ranges and better service from one of the group’s two distribution centres, which had problems last year.
Sales of gifts, decorations and confectionery performed particularly well and B&M, which is chaired by Sir Terry Leahy, a former boss of Tesco, told analysts it had to bring in sale stock early to meet customer demand.
B&M’s chief executive, Simon Arora, said: “We have once again demonstrated the strength, relative appeal and popularity of our model at a time of uncertainty for consumers generally and continuing structural change in the retailing sector. We have delivered our best ever Christmas trading and served over 5.5 million customers in a single week in the UK alone as we continue to gain market share.”
Total group sales rose 20.5% in the quarter to £789.1m as B&M opened 14 more stores in the UK, taking the total to 533, and seven more Jawoll stores in Germany, taking its total there to 73.
Its shares rose 7% to 296.5p in morning trading on Wednesday, the best performer across the FTSE 100 and 250 indexes, as some analysts said they planned to upgrade their profit forecasts for the year.
The strong sales at B&M – which Arora bought in 2005 with his brother – bode well for discounters despite talk of a fightback by the major supermarket chains before Christmas.
Strong sales from Nisa suggest the convenience store sector also had a good Christmas. The convenience store wholesale group reported a 2.2% rise in underlying sales in the 10 weeks to 1 January, partly thanks to a promotion on traditional festive veg.
David Jeary, an analyst at Canaccord Genuity, said: “B&M delivered the first positive surprise of the retail Christmas reporting season.” He said the group had enjoyed its strongest quarter since 2013 with a performance well ahead of the basically flat figures of the prior four quarters.
Jeary, however, said it was surprising that B&M had indicated only that it was confident of meeting profit forecasts for the year, rather than beating them.
“Clearly, the strength of Christmas trading has translated into improved management confidence. The lack of upgrade we believe stems from some natural management caution with regard to the remainder of the year,” he said.
