Leahy heads for the B&M check­out af­ter over­see­ing huge growth

The Daily Telegraph - Business - - Business - By Ash­ley Arm­strong

RE­TAIL vet­eran Sir Terry Leahy is step­ping down as chair­man of B & M Bar­gains five years af­ter tak­ing the role and steer­ing the dis­count re­tailer on to the stock mar­ket in 2014.

Since list­ing three years ago, B&M Bar­gains’ mar­ket val­u­a­tion has grown by around £1bn to £3.8bn as the cut­price chain has been one of the few re­tail­ers to shrug off con­sumer spend­ing con­cerns and es­cape Brexit woes. B&M Bar­gains has grown sales rapidly un­der Sir Terry’s guid­ance, with the group’s rev­enues jump­ing from £993m to £2.7bn on the back of an ag­gres­sive ex­pan­sion plan.

Emily Stella, se­nior re­tail an­a­lyst at Global Data, said that the de­par­ture of the for­mer Tesco chief had “un­set­tled in­vestors”, with the share price end­ing down 2.9pc at 380.9p.

Si­mon Arora, chief ex­ec­u­tive of B&M, said that Sir Terry’s de­par­ture was fol­low­ing “good cor­po­rate gov­er­nance” and high­lighted that the for­mer Tesco boss joined the busi­ness as part of his role at pri­vate eq­uity firm Clay- ton Du­bilier & Rice, which was orig­i­nally a ma­jor­ity in­vestor in B&M. It now owns less than 5pc.

Sir Terry will be suc­ceeded by Peter Bam­ford, Su­per­group chair­man and for­mer Voda­fone mar­ket­ing di­rec­tor. “Peter will be a solid pair of hands for our next stage of growth,” Mr Arora said.

The cut-price re­tailer also re­ported a 7.5pc in­crease in UK like-for-like sales for the six months to Septem­ber with pre-tax profits ris­ing by 17.8pc to £86.8m. An­a­lysts at Peel Hunt com­mented that “no­body in the an­a­lyt­i­cal com­mu­nity ex­pected like-for-like sales to ac­cel­er­ate in the sec­ond quar­ter, but they did so”. How­ever, pre-tax profits were slightly be­low the City con­sen­sus. B&M also dis­missed con­cerns that its re­liance on branded food goods, such as Heinz ketchup and Weetabix, meant that it was more ex­posed than other food re­tail­ers to ris­ing cost pres­sures from sup­pli­ers, and said that its gro­cery busi­ness had “out­per­formed the rest of the mar­ket”.

Tony Shiret, an­a­lyst at Whit­man Howard, com­mented that B & M was “struc­turally dis­ad­van­taged by its re­liance on branded gro­cery prod­ucts which are sig­nif­i­cantly more ex­pen­sive than the own-la­bel prod­ucts avail­able in the mar­ket”. How­ever, Mr Arora coun­tered that B&M cus­tomers “want brands, they don’t nec­es­sar­ily want own-la­bel copies”.

The busi­ness re­cently bulked up in food with its sur­prise pur­chase of cut­price North­ern con­ve­nience re­tailer Heron Foods in Au­gust.

The busi­ness plans to open 15 new Heron shops this year and 50 new B & M stores, as part of its wider ef­forts to grow an ex­ist­ing es­tate of 542 stores to a to­tal of 950.

£3.8bn The mar­ket val­u­a­tion of dis­count re­tailer B & M Bar­gains, which has risen by around £1bn since it listed three years ago

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