B&M European Value off to a flier thanks to hot weather and groceries

Discount chain operator B&M European Value Retail set off at an impressive pace in its new financial year, it revealed on Wednesday, buoyed by strong sales of garden furniture in the recent hot spell.

Total sales from the UK B&M stores and the Jawoll chain in Germany rose 18.3% to £656.3m in the three months to 30 June, which was slower than the 21.5% in the same period last year and the 19.4% seen in the last full year.

At constant currencies, group sales were up 17.2% compared to the 20.6% in the same period last year, as nine UK stores were opened in the quarter and four in Germany.

UK like-for-like sales however were up 7.3%, buoyed by strong grocery sales, compared to the flat period a year ago, with 1% added from the later timing of Easter this year.

The second quarter was reported as having started well and chief executive Simon Arora, who along with his brother and other private equity backers recently sold £454.3m worth of shares in the discount chain, said B&M was on course to achieve market consensus profit expectations for the full year.

On top of the 543 UK stores trading at the end of the quarter, between 40 and 50 new stores are planned for the UK business at its aims for 950 target.

Most of the UK openings will be during the second half because of the number of new-build stores in the programme, plus there was the reassurance of a "healthy pipeline" of new stores for the following financial year.

In Germany, there were 79 Jawoll stores at the end of the quarter, which is expected to rise to 90 by the end of next March.

"This quarter's like-for like growth represents B&M's strongest first quarter for three years," said Arora.

"It's driven by customers, wherever they live throughout the regions, becoming ever more receptive to the outstanding value delivered by B&M's unique business model in relation to the things they buy regularly for their homes and families.

"In these uncertain times, and with inflation returning to the UK market, more and more shoppers are actively seeking out value in our stores and that means our business is strongly positioned to do well and continue its rapid growth."

Analysts at house broker Numis remained comfortable with their forecast of 15% growth in profit before tax to £218m, which is in line with consensus.

They noted that B&M has secured its US dollar purchases through to June 2018, while the LFL sales progress will potentially dilute cost ratios and/or provide opportunities for reinvestment in the proposition.