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B&M hit by rising prices

by LLB Reporter
31st May 22 12:27 pm

When households feel the pinch one of the obvious things they can do is trade down to cheaper options and this should play into the hands of variety discount store B&M.

However, the company is simultaneously losing the tailwind it had during the pandemic when it was in a select grouping of shops which were able to remain open. And its value-based proposition means margins are pretty skinny and therefore vulnerable to inflation.

That helps explains why revenue and earnings were lower in the year just gone than the previous 12-month period and why the current year could see a further fall in profit.

AJ Bell’s Russ Mould said: “That’s not the message the market wanted to hear from B&M, even if the company is in a considerably stronger place than it was pre-pandemic.

“At least it sets a reasonably low bar for incoming CEO Alex Russo as he gets set to replace founder and current incumbent Simon Arora.

“The company hasn’t wasted any time in appointing the retiring Arora’s successor, though with Russo stepping up from the chief financial officer position it is not the most imaginative choice.

“While a fresh injection of ideas to the business might have been welcome, ultimately Arora has taken B&M from a struggling Blackpool grocery chain to a leading UK chain in the ranks of the FTSE 100 so maintaining some continuity has logic to it.

“Longer term there looks a decent chance B&M can emerge from the current cost of living crisis in better shape than it entered it.

“The company enjoys the kind of scale, allied with a strong balance sheet, which should help see it through tough times and come out the other side with its market position bolstered.”

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