Lockdown sales boost at B&M prompts £250m special dividend

Profits nearly double to £296m as retailer benefits from out-of-town locations

B&M sells a wide range of products from toys to electrical items, gardening goods and homeware.
B&M sells a wide range of products from toys to electrical items, gardening goods and homeware. Photograph: Cameron Smith/Getty Images

The discount retailer B&M is paying its shareholders a £250m special dividend, after a boost in sales during lockdown almost doubled profits in the first half of the year.

The group, which sells everything from homeware and toys to electrical items and pet supplies, was among the essential retailers allowed to remain open during the UK-wide lockdown in the spring, when it proved popular with shoppers.

Its UK revenues rose by almost 30% in the six months to 26 September and pre-tax profits soared by 95%, to £296m, higher than it had forecast in September.

Simon Arora, the B&M chief executive, has said the firm’s business model proved “well-attuned to the evolving needs of customers.” Simon Arora and his brother Bobby, who own 15% of the business, will receive £37m of the special dividend.

The group’s decision to pay a special dividend of 25p per share on top of its ordinary dividend is likely to reignite criticism of shareholder payouts by retailers, who have received taxpayer support including a business rates holiday during Covid-19.

B&M received £38m through business rates relief, but said this was offset by increased costs of implementing social distancing in stores.

The group has repaid the £3.7m in support it had received from the UK government’s furlough scheme in the spring, and said it did not intend to access the scheme again. During the first half it created more than 1,800 jobs

B&M, which was elevated to the FTSE 100 index in September, has benefitted from the location of its stores in out-of-town retail parks, which have attracted more shoppers than high streets or shopping centres during the pandemic.

The shares, which were 373p a year ago are currently changing hands at about 495p. The business is valued at nearly £5bn, with the Arora brothers’ stake worth some £750m.

“Our combination of everyday value across a broad range of product categories and convenient out-of-town locations has proved popular with shoppers,” Simon Arora said.

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“The company has clearly benefited from essential retailer status and has had a tailwind during lockdown,” said Greg Lawless, an equity analyst at the stockbroker Shore Capital.

“B&M has, arguably, had the perfect calm compared to the storm faced by much of UK retail in 2020.”

The discount retailer, which has more than 600 stores in the UK, said it expects sales to slow as fresh lockdown restrictions ease, although they currently remain at a similar level to the spring.