Yahoo Finance Discount retailer B&M sees profits soar 122% and pays back £3.7m furlough cash
The owner of discount retailer B&M saw profits more than double earlier this year, with new shoppers flocking to its stores amid the coronavirus crisis.
The retailer announced it would repay the £3.7m ($4.9m) it received in furlough wage subsidies from the UK government earlier this year, and pay shareholders a 59.2% higher half-year dividend in December.
When the UK was undergoing its first lockdown, the government rolled out the furlough scheme to help try prevent job losses. It meant that the government covered 80% of eligible staff salaries (capped at £2,500 a month) as long as employers did not lay them off. It has since extended the scheme until March 2021.
B&M European Value Retail (BME.L) which includes B&M, Heron Foods and Babou in France, revealed it had made £235.6m ($310.3m) in pre-tax profits on a statutory basis in the six months to 26 September.
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It marked a 122.4% leap on the previous year, with group revenues leaping 25.3% to £2.24bn.
B&M UK revenues were up 29.5%, and it announced it had created 1,800 new jobs as COVID-19, with not only higher demand sparked by the pandemic and lockdowns but also the economic crisis boosting trade.
“As a value retailer, the B&M appeal is strengthened when large sections of the population are concerned about their personal finances or are having to live within constrained household budgets,” it said.
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“In the UK, many new customers have shopped with B&M for the first time, with a value-led model and large Out of Town locations proving particularly relevant during these uncertain times.
“The lasting impact of COVID-19 on individuals, communities, the retail industry and the wider economy remain unknown, but will clearly be very significant. Should it lead to further acceleration of the already profound structural changes affecting retailing, including the trend towards value and convenience, then the B&M business remains well positioned to grow sustainably into the long term.”
The company is planning to open up to 45 new stores this financial year alongside 10 closures.
Unlike many retailers, B&M has been allowed to continue to trade throughout England’s lockdown as it is classed as an essential retailer. Heron Foods, which includes 299 stores, has also been able to remain open.
It said it had “taken account” of potential impacts from the pandemic, but had not examined the impact of a total closure of business. “The majority of the product categories sold in the UK businesses and certain lines in the French business are officially classified as essential goods.”
In France, revenues are expected to take a big hit from the fact only around half its stores are open. They are restricted to selling essential goods, “which form a very much smaller proportion of the offer than in the UK.”
B&M warned that higher costs from providing PPE, extra cleaning and social distancing marshals had “substantially offset” the impact of around £38m it saved in business rate relief in the first half of the year.
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