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- Previous periods of economic strain have generally been positive for discount retailers and so far we see little reason to believe this latest period of rising inflation and shrinking disposable incomes will be any different.
- That bodes well for B&M, whose store count and customer awareness (particularly in areas outside its traditional Northern heartland) grew rapidly during the pandemic when competitors stores were shuttered.
- All three parts of the company — B&M UK, Heron Foods, and B&M France — are performing well with growing sales and high cash flow. While margins may be down from pandemic-boosted levels they’re still substantially higher than pre-pandemic, which shows the benefits of all that increased consumer awareness as footfall remains significantly up on prior levels.
- The company’s trailing 16.5p ordinary dividend equates to a hearty 3.4% yield at present. But add in the additional 20p per share special payout due in February and that yield jumps to 7.7%. Now, investors shouldn’t count on special dividends continuing to be an annual occurrence, but B&M’s board remains committed to returning excess cash to shareholders when it deems leverage has fallen too low.