B&M European Value Retail S.A. (LON:BME), the UK's leading variety goods discount retailer, has released its trading update for the first quarter of the current financial year (FY25), covering the 13-week period from March 31, 2024, to June 29, 2024. The Group has shown a solid performance, with key highlights including revenue growth and strategic store expansions.
Revenue and Store Expansion
For Q1 FY25, B&M reported a 2.4% increase in Group revenues. This growth was primarily driven by increased volume and a disciplined store opening program across its three businesses. The Group's strategic focus on expanding its store footprint has yielded positive results, contributing significantly to the overall revenue increase.
- B&M UK: The company made strong, profitable progress with its UK store openings, adding 19 new stores in Q1. This is part of a larger plan to open 45 new stores throughout the year. Notably, all stores opened since last year have been performing ahead of expectations.
- France: The French division added 2 new stores in Q1 and is on track to open a total of 11 new stores this year.
Performance Metrics
B&M UK reported a like-for-like (LFL) decline of 3.5%, excluding the Easter year-on-year timing impact of 1.6% in Q1. This decline comes against exceptionally strong comparatives of 9.2% in Q1 of the previous year and unseasonal weather in April and May this year. Despite these challenges, the company's strategic stock management has mitigated potential markdown risks.
- Seasonal Stock Management: The well-planned seasonal stock buy, especially in Gardening, resulted in high sell-through rates with no markdown risk for Spring/Summer. The gross margin performance for B&M UK in Q1 has been strong and in line with expectations.
- Operational Strength: The Group's logistics capacity across the UK and France continues to support volume growth effectively. The network configuration in the UK has been strengthened over the past two years, with additional capacity already being added in France.
Outlook and Future Plans
As B&M moves into Q2, the three businesses are well-positioned both commercially and operationally. Product availability remains strong, with market-leading product ranges and price points in general merchandise. The Group continues to expect profitable, cash-generating growth across the full financial year, supported by strong fundamentals and normalizing comparatives.
- Logistics and Capacity: The company's logistics network is robust, ensuring that the increased volume from the expanded store base is well-managed. The ongoing enhancements in the UK and the additional capacity in France are set to further bolster the Group's operational efficiency.
- Market Position: B&M's strategic focus on maintaining strong availability and competitive pricing is expected to sustain its market-leading position. The continued expansion and enhancement of product ranges are anticipated to drive future growth.