Think retail is dead? No one told these thriving retailers that are growing at light speed

Why I’d buy these retailers that are posting double-digit sales and profit growth, strong like-for-like improvements and still have plenty of room to expand.

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It’s been a bad few months for retailers as the likes of Toys R Us and Maplin have collapsed into administration while companies from Carpetright to Mothercare have seen their share prices hammered due to mounting investor worries. But amid all this doom and gloom, a few retailers are not just surviving but actually thriving.

No one can turn down a deal 

Chief among them are discount chains that have long proven popular with lower income shoppers and since the last recession have also won over middle-class shoppers with their unbeatable prices and comparable quality to higher-priced chains. That aptly describes B&M European Value Retail (LSE: BME), which trades under the eponymous B&M fascia across the UK, the Jawoll brand in Germany and also recently purchased discount grocer Heron Foods domestically.

Each of these brands have been trading well with the flagship B&M carrying the bulk of group-wide growth on its shoulders as its like-for-like sales orse by a whopping 3.9% in the quarter to 23 December. Together with new stores openings, this led to revenue rising from £741.4m to £837.3m during the period.

Looking ahead, I expect B&M’s like-for-like growth to move up and down from quarter to quarter. But it should continue to grow nicely over the long term as the group broadens its range of grocery offerings, spends more on marketing to build brand awareness, and benefits from weak wage growth, leading consumers to trade down to discounters.

There’s also considerable scope for growth through new stores openings as at quarter-end, B&M traded from 569 stores, Jawoll only had 84 and Heron Foods 263. Given the majority of the group’s UK stores are geographically concentrated in the north of the country, there’s space for continued expansion into virgin territory in the south.

With industry-beating EBITDA margins of 8.6%, an attractive valuation, healthy balance sheet and continued growth from new stores, as well as like-for-like expansion, I’m very happy to own my B&M shares for the long term.

Selling plenty of sneakers 

Another retailer that didn’t get the memo about traditional bricks and mortar stores going the way of the dodo is JD Sports (LSE: JD). In the year to February, the sports clothing chain saw sales jump 33% to £3,161m as like-for-like sales grew 3%, online sales rose by 30% and a handful of new stories were opened overseas.

This growth has come from broader trends such as the immense popularity of athleisure, as well as JD being smart about how it presents its stores and the goods inside, unlike some competitors such as Sports Direct. And for the next few years, I reckon the company can continue to expand at a breakneck pace as it opens up new stores in Europe, focuses on the US, expands into Asia and invests in boosting its online offerings.

And with the company’s stock trading at just 14.8 times forward earnings, a balance sheet with net cash of £309m at year-end and a history of incredible shareholder returns, I reckon JD Sports could be a fantastic long-term growth retailer trading at a very attractive price.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Ian Pierce owns shares of B&M European Value. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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