B&M surges as low prices lure new shoppers
SHARES in B&M scaled new heights yesterday as its growing popularity with middle-class shoppers helped it buck the gloom on the High street.
in a bumper trading update cheered by investors, the discount retailer raised its profit forecasts and vowed to open another 45 stores by March.
Knockdown prices helped attract customers during the coronavirus lockdown when its spacious stores were designated ‘essential’ and allowed to remain open.
shares rose another 4pc yesterday to a record high of 510.2p – meaning they have doubled in value in just six months.
the rally since March has added £459m to the fortunes of the arora brothers who control the business and now have a stake worth £918m.
With a market capitalisation of £5.1bn, B&M is more valuable than sainsbury’s and more than twice the size of Marks & spencer.
amisha Chohan, equity research analyst at investment management firm Quilter Cheviot, said: ‘B&M is firing on all cylinders. the retailer is winning market share and has attracted a new, middle-class, customer base who are beginning to shop with them regularly.
‘We believe B&M will continue to outperform peers as consumers become much more money conscious.’
the Liverpool-based company, which recently entered the FtsE 100, reported a 23pc rise in sales in the UK over the six months to september 26.
B&M, which has around 600 stores, sold out of gardening stock in the spring, and has since benefited from booming demand for homeware, electrical items, groceries and DiY products. it expects to post earnings of £285m for the first six months of the financial year, ahead of its previous guidance of between £250m and £270m.
B&M began as a single store in Blackpool in 1978, but has grown to over 600 shops with 28,000 staff. it was taken over in 2004 by Cambridge law graduate simon arora, 50, who runs it with his brothers Bobby and robin. they have sold £910m of shares since they took the firm public in 2014.
it is one of several discounter success stories in British retail in recent years, following in the footsteps of aldi and Lidl, which successfully disrupted the supermarket industry in the aftermath of the 2008 banking crisis.
analysts believe that as the furlough scheme tails off at the end of October and unemployment rises customers will become ever more focused on price.
russ Mould, investment director at aJ Bell, added: ‘B&M is well positioned for tougher economic times. Questions may turn to where it goes next. amid an apparent takeover of asda, there has been some speculation that B&M might be a good merger candidate for asda in the medium term.’