Comment: B&M’s maiden results will show its ‘treasure hunt’ appeal

B&M Bargains, the value variety store group that pitches itself as a treasure hunt experience for shoppers, posts maiden interims next week.

Listed earlier this year at 270p, B&M hit a high of just under 297p but has been as low as 227p. This week it was trading pretty much flat on the offer price.

But B&M looks as if it might amass a tidy treasure trove for itself and investors as it takes advantage of shopping habits that shifted in the downturn – the same trends that have powered the advance of other value specialists such as Aldi and Poundland.

B&M maintained in its flotation prospectus that it has a distinct proposition.

Its multiprice range distinguishes it from single-price specialists because of limited product overlap.

It has strengths in particular categories that differentiate it from other bargain store groups.

And its food offer complements rather than competes with mainstream grocers.

What the customer sees is the result of intense focus behind the scenes. The assortment is limited to 5,500 skus on which there is a ‘one in, one out’ policy, and highly effective sourcing enables competitiveness.

It all combines to create a compelling customer proposition and even before the float B&M had started to exploit international opportunities through its acquisition of German counterpart JA Woll. The ambition is to replicate in Europe the power and scale of the big US dollar chains.

Numbers already in the public domain give confidence in B&M’s prospects. In the three years to the end of March, for instance, branded goods giants Procter & Gamble, Unilever increased their sales to B&M at a compound annual growth rate of 58% and 169%.

Next Tuesday’s results should show that the retailer is on track with its plans.

House broker Numis has upgraded B&M from hold to add and says although the retailer’s shares are trading at a premium to its retail peers generally, it is at a discount to other growth retailers such as Poundland.