Sales at discount retailer B&M soared in the run-up to Christmas as shoppers snapped up its cheap food and revenues were bolstered by its acquisition of grocery chain Heron Foods.
Group sales climbed 23pc to £970m in the three months to Dec 23, up from 20.5pc growth in the same period last year, with Heron adding £80m to the top line.
Sales at UK stores open more than one year were up 3.9pc, which B&M said underlined “continued robust performance of our grocery and FMCG ranges”. However it marked a slowdown from the 7.2pc like-for-like growth it recorded in the same period last year.
Though it does not sell fresh food, B&M’s range of cut-price branded staples, such as biscuits, crisps and breakfast cereals, pose an additional threat to the "big four" of Tesco, Sainsbury's, Morrisons and Asda, which are already battling with competition from fast-growing German grocers Aldi and Lidl.
Retail analyst Bryan Roberts said: “Worth noting that B&M highlights grocery as a driver of like-for-like growth. Media obsessed over Aldi & Lidl while overlooking the pain B&M, Home Bargains etc are inflicting on [the] big four”.
B&M opened 19 UK stores in the period, taking its total to 569. It bought Heron, which has 263 stores and sells mostly frozen and other non-fresh food, for £152m in August.
Chief executive Simon Arora, who co-founded the company with his brother Bobby, said it “continues to go from strength to strength”.
“Despite the demanding comparatives from the very strong Christmas in 2016, our buying, supply chain and retail teams achieved another outstanding performance this year by doing what we do best, which is delivering great value for customers week-in, week-out,” he said.
B&M's shares were up 3.6pc to 412p in early trade.