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Revenues leapt by a quarter and profits more than doubled at B&M European Value Retail as the coronavirus pandemic led to a spike in demand.

Overall sales were up 25.9% to £4.8bn for the year to 27 March, up by 25.7% on a constant currency basis.

The core B&M UK business had an “exceptional year”, with like-for-like sales up 23.8% due to a material increase in sales densities. B&M said the performance was boosted by categories related to the pandemic where elevated demand was seen throughout the year.

Whilst the business did benefit from remaining open during periods when “non-essential” retailers were closed, B&M said, performance remained strong even when no restrictions were in force.

Despite the new store opening programme being disrupted in the first half of the year, the business opened a further 43 new stores in the period, with trading at these new stores being “strong”.

B&M UK gross margin also saw a significant increase this year, driven by a combination of a mix shift towards higher margin general merchandise sales and an unprecedented level of sell-through on seasonal lines due to the elevated demand.

Heron Foods continued to perform well throughout the year and also benefitted from heightened demand, particularly in neighbourhood locations. Sales were up 6.4% to £389.9m.

In France, conditions have been more challenging. The French business was either closed or restricted to selling essential items of ambient food and FMCG (representing only 15% of sales) for a total of 10 weeks during the year, disrupting both the Spring and Winter peak trading periods. Sales still rose 9.1% to £283.4m for the period.

Overall group adjusted EBITDA increased by 83% to £626.4m driven by higher sales densities, an elevated gross margin due to lack of markdown activity and operating leverage in the core B&M UK business

Group statutory profit before tax was up 108.5% to £525.4m.

However, B&M guided to a slowdown of sales in 2021 – with a like for like revenue decline in the current financial year due to tough comparatives.

The B&M UK business experienced very strong sales in the last month of its financial year, but over the first nine weeks of the new financial year B&M UK like for like sales are down 1%, despite benefitting from a pull-forward of gardening demand to April.

In France, a further national lockdown began on 3 April 2021 for a total of about 6 weeks. This meant that many of our stores were closed, with those remaining open restricted to selling essential items only. Since restrictions were lifted on 19 May 2021 there has been a “pleasing recovery”.

B&M said it is likely that its group gross margin will revert to more normalised levels this year, with the return of markdown activity on seasonal goods expected.

The group is however focused on customer retention and disciplined cost control across all fascias to underpin efforts to maintain an adjusted EBITDA margin higher than historical levels, albeit lower than the exceptional 13% margin delivered last year.

CEO Simon Arora commented: “The last year has been an exceptional one. Our results reflect the speed at which we responded to the challenges presented by Covid-19, and the strength of our execution. The core B&M UK business, as an essential retailer, traded throughout the year and welcomed a number of new shoppers, with colleagues working tirelessly to maintain on-shelf availability and provide a safe shopping environment. We also made strong progress in France, despite many stores being closed for up to ten weeks throughout the year. I express my sincere thanks to colleagues across the Group for all of their efforts and determination.

“Looking ahead, there are many uncertainties as society slowly emerges from lockdown and trading patterns are likely to be unpredictable for much of the year. Within our UK business, we will be up against the strong comparatives from last year but we remain confident that the B&M customer proposition, with its modern network of predominantly Out of Town stores and value-led variety offer, will prove highly relevant to the needs of shoppers. As such, we are well positioned to support the communities in which we trade, retain the loyalty of new customers, and to continue our store roll-out strategy.”

B&M shares have dipped 2% in early trading to 549.8p on the measured outlook.

Morning update

Rémy Cointreau managed to grow organic revenues last year, despite the decimation of the off-trade and travel retail due to COVID.

In the year to end March 2021, Rémy Cointreau posted sales of €1,010.2 million, up 1.8% on an organic basis and down 1.4% on a reported basis.

Current Operating Profit came in at €236.1 million, up 9.7% on a reported basis and 12.8% on an organic basis with a current operating margin of 23.4% (up 2.4 percentage points), close to its all-time highs.

It said this performance was driven by strong growth in the gross margin and excellent control of overheads, meaning it was able to increase its marketing spend to support its brands through the recovery.

The group’s cognac sales were up 3.7%* in financial year 2020/21, with growth driven by a 9.1% increase in volumes combined with adverse price/mix effects of -5.4%. After a notable decline in the first half of the year, sales quickened significantly in the second half (up 27%), buoyed by the United States and mainland China.

Liqueurs & Spirits also saw a sharp upturn in business in the second half of the year (+7.2%), but overall sales declined slightly over the full year (down 3.2%). The House of Cointreau and the Whisky business both posted very strong performance, while the rest of the portfolio was hampered by weakness in the EMEA region (due to the closure of the on-trade channel) and the Duty Free segment.

Partner Brands sales declined slightly in the full year (-1.5%).

The group said it has emerged from the crisis “stronger” despite the continued “fragile and uncertain public health, economic and geopolitical environment”.

For financial year 2021/22, the group is confident in its ability to continue to win market share in the exceptional spirits sector. In particular, the group is anticipating an excellent start to its financial year, underpinned by very favourable base effects, shipment phasing effects, and new, structurally more buoyant consumption trends in the United States.

Being ahead in the unfolding of its 2030 strategic plan and given the favourable environment, the Group has decided to revise up its investments in marketing to support its brands through the recovery and boost their medium-term growth potential by developing brand awareness and attractiveness.

Over the past few months, in a context marked by the pandemic, Rémy Cointreau has benefited from an acceleration in pre-existingtrends that support the 2030 strategy announced in June 2020: the rise of mixology and at-home consumption, the outperformance of high-end spirits, strong growth in online sales and growing interest in corporate social and environmental responsibility.

“Rémy Cointreau reiterates its aim of becoming the global leader in exceptional spirits, a segment in which the growth outlook remains attractive, particularly in a world of more responsible consumption.”

Footfall has strengthened since non-essential retail opened in April, but further gains following the reopening of indoor hospitality in May were muted, according to new data from Springboard.

Footfall was -27.5% lower than the 2019, pre-pandemic level, compared with -32.7% in April, due to wet weather, limitations on dining capacity and the fact that the increase mainly occurred post 5pm when volumes are much lower than pre 5pm.

The gap in footfall from 2019 to 2021 widened over the month; from -25.3% in the first week of May to -26.8% by the last week.

Footfall declined from 2019 by -36.3% in high streets, -30.3% in shopping centres and -5.7% in retail parks.

However, consumers are drifting back into larger destinations for work or leisure, with footfall in Central London increasing from April by +17.2% and in regional cities elsewhere in the UK by +20.4% compared with a rise across all UK high streets from April of just +7.1%.

This increasing shift of footfall back into London and other regional cities will be strongly dependent on whether the government’s roadmap for the easing of restrictions will proceed as planned or whether easing will be deferred beyond 21st June.

On the markets this morning, the FTSE 100 has opened the day sharply down, dropping 0.9% to 7,060.8pts.

Fallers include Total Produce, down 4.6% to 210p, Finsbury Food Group, down 2.1% to 90p and Marston’s, down 2% to 92.9p. 

Risers so far today include PayPoint, up 1.7% to 610p, Ocado, up 1% to 1,865.5p and Science in Sport, up 0.9% to 79.7p.

Yesterday in the City

The FTSE 100 ended the day up 0.4% to end the day at 7,108pts and move closer to its post-COVID high.

Risers yesterday included C&C Group, up 3.6% to 249.6p, Nichols, up 2.9% to 1,580p, AG Barr, up 2.6% to 549p, Tate & Lyle, up 2.5% to 777.2p, Glanbia, up 2.1% to €13.90 and DS Smith, up 1.9% to 432.1p.

The day’s fallers included Greencore, down 4.3% to 137.2p, THG, down 2.5% to 607.5p, Ocado, down 1.5% to 1,847p, Premier Foods, down 1.5% to 104.4p, B&M European Value Retail, down 1.5% to 561.2p and Just Eat Takeaway.com, down 1.5% to 6,284p.

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