Shockwaves went through the retail sector today after the CEO of B&M Value Retail became the second top boss to cash in a significant chunk of his stock in as many days.
SSA Investments, the family office of B&M CEO Simon Arora, sold 40 million shares in B&M overnight at a price of 585p — a 1.8% discount to Thursday’s closing price.
SSA manages the wealth of Arora and his brothers Bobby and Robin. Simon and Bobbby bought the discounting chain in 2004 and have helped turn it from a struggling regional brand into a retail Goliath. The pair, and brother Robin who sits on the board, have an estimated net worth of £2.5 billion.
The overnight share sale, arranged by Goldman Sachs, raised £234 million for the brothers. The chunk represents 4% of the company’s outstanding stock and leaves the Aroras with 7% of B&M.
A spokesperson declined to comment on the reason for the sale.
Nick Bubb, an independent retail analyst, said: “Investors who took part in the last placing of shares in B&M by SSA Investments, the Arora family investment vehicle, a year ago — 40 million shares at 545p — did quite well, as the shares closed at c597p last night, but, given the recent shift in sentiment against retailers, many will have groaned at the overnight news that the Arora family now wants to sell another 40 million shares.”
Shares dropped 19.2p, or 3.2%, to 577.4p today, leaving it near the bottom of the FTSE 100.
B&M is the second major retailer to see a top exec cash out in as many days. JD Sports executive chair Peter Cowgill surprised the market on Thursday afternoon as he cut his holding in half. Cowgill raised just over £20 million selling 10 million shares. The move sent JD’s stock plummeting 7% yesterday, though it recovered 2.75p to reach 200.7p this morning.
The sales will leave many investors wondering if this could be the top after what has been a bumper Christmas for most. Retailers including both JD and B&M have delivered a slew of profit upgrades over the last fortnight. The sector faces a much more uncertain 2022 as soaring energy costs squeeze household finances.
A slump in retail shares over the last two days has knocked £1.6 billion off the value of the UK listed sector in what most see as profit taking.
B&M is likely to fare better than most in any cost of living squeeze given its focus on the discount end of the market.