Discount retail is digging in as B&M buys 12 B&Q stores

The shape of the high street has shifted in one of the most symbolic signs yet of the rise and rise of discount retailing.

B&M Bargains, the cut-price variety retailer chaired by the former Tesco boss Sir Terry Leahy, is understood to have snapped up 12 of the 14 sites that have so far been sold by the Kingfisher-owned B&Q, Britain’s biggest DIY retailer.

B&Q has previously revealed that it will shut 60 of its 360 stores over the next two years, while B&M said it would open 60 new stores this year alone – up from the 40 first mooted.

Tony Shiret, a retail analyst at the investment bank BESI, said: “The most significant news here is the disposal of 12 B&Q units to B&M (undisclosed but no leap of the imagination). Kingfisher management believes that B&M is no real threat to B&Q, with a limited overlapping range.

“While true of the current majority of B&M stores, the largest ones carry, in our view, a very credible range of DIY low-end furniture and to a lesser extent garden products.”

The news came as B&M, which sells everything from toys to gardening shears and tinned tuna, revealed its maiden full-year results since listing on the stock market. Pre-tax profits hit £61.7m in the year to March, against a £14.3m loss last time, on sales up 29.5 per cent at £1.65bn.

Its chief executive, Simon Arora, said: “We originally planned on opening 40 stores this year, but property developers are back with confidence and more mature retailers are rightsizing their estate and exiting sites, so we’ve raised this to 60 stores.”

Sources at B&M added that many of the new stores would be purpose-built by developers for the company.

Like-for-like sales increased by 4.4 per cent and Mr Arora added that he plans further expansion into Europe, after buying the German group Jawoll earlier this year.

The cold weather has hit more recent sales, although Mr Arora said he was able to fill B&M’s shelves with different items due to its wide range of products. He added: “I asked my two girls last weekend if they wanted to get out the paddling pool, and they both looked at me like I was mad.”

By contrast, Kingfisher revealed that like-for-like sales at B&Q fell 1.1 per cent in the first quarter, although this was offset by continued strong growth at its Screwfix business, up 15.4 per cent, which targets the building trade. Outdoor seasonal and building product sales were hit hard, dropping 4 per cent.

The strong pound also hit Kingfisher’s French business. Sales at Castorama and Brico Dépôt, which make up a third of total revenues, declined by 12.4 per cent and 10.4 per cent respectively.

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