Discount retailer B&M has seen sales plummet in its first quarter, against strong lockdown comparatives, as cash-strapped Brits cut back on discretionary spending.
In a trading update for the 13 weeks from 27 March to 25 June, the London-listed business said group revenue had dropped 2.2 per cent on a constant currency basis.
Across the core shop estate, like-for-like revenue had dropped 9.1 per cent for the quarter overall compared to the year prior.
However, the group pointed to “exceptionally high sales” in April 2021 and a “distorting nature” of such comparatives. The business had reaped the rewards of being allowed to remain open during Covid lockdowns last year.
While sales were down 19.1 per cent over the five weeks of April 2022, over the subsequent eight week period covering May and June, revenues were down just 1.6 per cent compared to the year prior.
The company said it would not be making any change to its guidance published last month, placing expectations for 2023 adjusted EBITDA in the range of £550m to £600m.
Last month, the retailer pointed to an “uncertain macroeconomic outlook” and said it anticipated shoppers would cut back on spending on non-essential items.
Analysts have said B&M’s position as a budget retailer places it in a good position to draw some market share amid the cost of living crisis.
“Britons are cutting back on non-essential items and trading down from premium grocers,” Alex Smith, global sector lead for retail research at Third Bridge said.
“B&M is over-weight in general merchandise and has a limited capacity to benefit thanks to its selective ranges of fast-moving consumer goods (FMCG). Our experts say there is an opportunity for B&M to carry more FMCG during these turbulent times,” Smith explained.
“B&M needs to focus more on price communication if it is to win customer trust during this period of increased competition.”