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Update on B amp M

Article By: ,  Financial Analyst
June 2, 2014 6:11 PM

The growing list of retail companies to have listed – or announced plans to list – on the London Stock Exchange so far this year is well known and now so-called discount retailer, B&M European Value Retail, makes that list.

Indeed, B&M announced its IPO plans a few weeks ago, with the company looking to garner proceeds of around £75m with which it intends to reduce its debt.

Reports which surfaced on Friday suggest that the company could sport a valuation of up to £2.9bn.

So, given B&M’s potential valuation, a look at the company’s numbers seems fitting. Here are the details.

B&M’s latest financial performance…

The company – which sells a wide array of products ranging from furniture through to food and drink – boasts an average of 2.7 million individual customer transactions per week, claiming 138 million individual customer transactions in its year ended 29th March.

And that seems to be translating into decent numbers in terms of top-line growth and profitability.

For its year ended 29th March, B&M took revenue of around £1.3bn, representing a 28% increase over the same period the year before, with like-for-like sales in the period up 6.5%.

Adjusted EBITDA for the period came in at £130m, up from £105m reported in the prior year.

The company said it has continued to enjoy strong trading since March, having enjoyed “record sales” over the Easter trading season.

Meanwhile, B&M has expansion ambitions…

The company claims potential for some 850 B&M stores in the UK, up from 373 stores in the UK as at 29th March.

That’s in addition to further expansion plans in Europe, with intentions to build on its purchase in March of an 80% stake in German discount retailer, JA Wolls Handels, which itself had 49 stores in Germany as at 29th March.

The aim, according to the company is to replicate the success of its larger US-based equivalent, Dollar General, which boasts over 11,000 stores and took revenue of $17.5bn for its year ended 31st January.

Investor appetite for new retail stock listings…

Following retailer Fat Face’s recent about-turn with its IPO plans – citing “current equity market conditions” as the main factor in the decision – there’s been talk that investor appetite for new retail stock listings could be starting to wane.

That’s debatable but the fact that arguably high valuations have been called into question over recent times isn’t.

B&M’s decent performance is there to be seen and it certainly bodes well that it’s looking to position for further growth. All of that should draw sufficient investor interest – but B&M’s reported top-end valuation prompts pause for thought.

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