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