B&M and WH Smith opening flurry of new stores after Wilko’s demise

• B&M plans to open ‘not less than’ 125 stores across the UK in three years 
• WH Smith saw sales rise by more than a quarter over the past year 

B&M and WH Smith have become the latest retailers to reveal plans to expand the size of their UK estate over the next year.  

FTSE 100-listed B&M has said it is on track to open ‘not less than’ 125 new stores across the UK over the next three years, with the bargain retailer capitalising on rival Wilko’s demise. 

The group has agreed to snap up 51 former Wilko stores and said on Thursday it has the ‘runway’ to at least double its size in the UK in the medium term.

IB&M opened 13 new UK stores over the last year, representing a net increase of 5 stores.

On taking over a number of old Wilko stores, B&M, said: ‘We will never over-extend ourselves or compromise on the quality of our store locations in pursuit of achieving a promised number of openings. 

‘We will not neglect our core estate in pursuit of an excessive number of new openings. Our growth will be disciplined and not at the expense of excellence in standards.’

B&M, which currently has a network of over 700 UK stores, raised its target number of stores from 950 to 1,200. 

It follows an upbeat update from high-flying Marks & Spencer on Wednesday, with the upmarket retailer planning to open nine new stores across the UK this month alone.

B&M reported a 16.1 per cent increase in first-half core earnings and raised its full-year guidance, but slowing sales left the group less optimistic than rival retailers about the so-called ‘golden quarter’ amid slowing trade. 

The group said that in the first six weeks of its third quarter, like-for-like sales in the main B&M UK business were up 1.6 per cent. In the last three weeks of that period, sales were up 4.5 per cent, marking a slowdown from growth of 6.2 per cent in the first half.

B&M said it now expected annual adjusted earnings before nasties of £620million to £630million, up from the £573million made a year ago.

For the first half to 23 September, B&M made adjusted EBITDA of £269million, with revenue up 10.4 per cent to £2.55billion.

B&M shares were down 3.61 per cent or 19.40p to 518.40p on Thursday morning, having risen over 38 per cent in the last year. 

Russ Mould, investment director at AJ Bell, said: ‘Despite upgraded guidance on earnings and store roll-out ambitions, discount retailer B&M was out of favour with the market on its latest update.

‘A proposition of selling a range of discounted goods should chime with households which are looking to save money, so perhaps there was some disappointment at relatively sluggish like-for-like growth in the first six weeks of its “golden quarter”, even if the picture in the last three weeks has been more encouraging.

‘An admission that volatile market conditions make forecasting tough may also have been in the minds of investors.’

WH Smith vows 100 new stores as travel business takes off 

WH Smith sales rose by more than a quarter over the past year, as it was boosted by the continued recovery of the travel industry and new openings.

On store openings, it said: ‘Across the UK, North America and Rest of the World we won 92 stores in the year and now have over 110 stores won and due to open, of which we expect over 100 to open this financial year whilst closing 22 stores as we focus on better quality space.’ 

The group saw profits almost double over the period as it benefitted from a higher numbers of travellers at airports and train stations.

WH Smith reported a headline pre-tax profit of £143million in the year to 31 August, compared with £73million a year earlier.

It highlighted the firm’s heightened focus on travel stores compared with traditional high street sites, with travel bringing in a £164 million trading profit compared with £32million from its high street arm.

Group revenues for the year rose by 28 per cent to £1.79billion, as it was supported by a 36 per cent increase in revenues through its UK travel business.

High street sales, however, fell over the year, slipping 1 per cent to £469million.

Carl Cowling, chief executive of WH Smith, said he was ‘very pleased’ as about the start of the financial year.

He added: ‘This has been another year of significant progress for the group.

‘We have started the new financial year well with total revenue in travel UK up 13 per cent, North America up 15 per cent, and rest of world up 27 per cent.

‘With good trading and very positive prospects, despite the uncertainty in the economic environment, we are confident in the group’s outlook for the new financial year.’

WH Smith shares rose 1.01 per cent or 12.00p to 1,201.00p on Thursday morning, having slipped over 6 per cent in the last year. 

Commenting on B&M and WH Smith, analysts at Peel Hunt said: ‘Both companies have plenty going for them but neither is especially undervalued and without an upgrade, we suspect they will probably stay range bound for the time being.’