January 12, 2018 / 10:52 AM / a year ago

UK's B&M confirms march of the discounters with festive sales rise

LONDON, Jan 12 (Reuters) - British retailer B&M reported strong trading in the last quarter of 2017, underlining the appeal of discount retailers in the Christmas period to increasingly budget-conscious consumers.

Discounters are on the rise in Britain because consumers are under pressure from slow wage growth compounded by higher inflation in the wake of the 2016 referendum vote to leave the European Union.

Earlier this month Aldi UK and Lidl UK, the British grocery arms of the German discount supermarkets, reported total sales growth for December of “over 15 percent” and 16 percent respectively, driven by aggressive store opening programmes, but with some comparable store sales growth.

Liverpool, northwest England-based B&M, which trades as B&M Bargains and B&M Homestore in the UK, said on Friday group sales rose 22.7 percent in the 13 weeks to Dec. 23, including a 3.9 percent increase in B&M UK like-for-like revenues.

B&M called out “the continued robust performance of our grocery and FMCG (fast-moving consumer goods) ranges, further operational improvements to store standards for customers and the recognition of our value offer by consumers generally.”

The firm said it would meet market expectations for full-year earnings.

Shares in B&M, which listed at 270 pence in 2014, were up 2.5 percent at 406.8 pence at 1037 GMT, valuing the business at 4 billion pounds ($5.4 billion).

“We believe B&M has continued to benefit from a shift to value driven by a squeeze on UK consumer purchasing power,” said RBC Europe analyst Shelly Xie, who has an outperform rating on the stock.

On Thursday several major British retailers, including Tesco and Marks & Spencer, disappointed with Christmas sales updates.

Company statements and survey data this month have generally shown consumers cut back on almost everything other than food purchases in the run-up to Christmas.

The continued growth of online sales has also been a feature. ($1 = 0.7348 pounds) (Reporting by James Davey; editing by Mark Heinrich)

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