A cluster of private equity firms are understood to have made first round bids for B&M Bargains, with a view to either buying the value retailer entirely or injecting capital for further growth.
B&M is understood to be dangling a sale figure of £850m – and impressive sum which is a reflection of the boom variety retailers have enjoyed over the past three years. But credit should also be paid to B&M owners, brothers Simon and Robin Aurora, who bought the retailer in 2004 and have built it into a business with sales pushing £1bn.
B&M was founded in Blackpool in 1976 but the family struggled to keep the business growing, and by 1999 UBS Capital took a stake in the firm and brought in new management.
The value retailer suffered a £250,000 loss in 2004 as the Arora brothers took over and brought in new management.
When the Arora brothers took over, the retailer had just 19 stores. Rapid expansion followed, with the retailer taking advantage of shops made vacant from the demise of retailers such as Kwik Save, Au Natural and Woolworths, and by 2009 B&M had hit the 150-store mark.
B&M was mainly concentrated in the north initially, then in 2008 it opened in Scotland and Wales for the first time, and in 2009 it launched in Northern Ireland.
Expansion across the UK also allowed B&M to open a larger out of town format under the Homestore fascia, trading in units up to 25,000 sq ft, which are much larger than the B&M ideal high street store size of between 8,000 and 10,000 sq ft. The new store fascia launched in 2006 after B&M acquired 12 stores from the administration of Glyn Webb Wallpapers, which the Arora brothers had a stake in. These stores offer furniture, soft furnishings and DIY products.
During 2011, 78 stores were added, taking the total network to 271. These new shops included the transfer of 36 Opus Homewares stores into the company, which have since been rebranded to B&M. Opus Homewares’ ownership had previously been spread around extended family and family trusts. Another 11 former Focus stores were then added in the same year and at the last count in April 2012 the store network was approaching 300.
Store expansion is part of the reason sales are now approaching £1bn, from just £70m eight years ago. Pre-tax profit hit £51.7m in 2011.
B&M’s product offer has shifted under the Aroras with more focus on non-food products. Its traditional split is 70% food and 30% non-food. B&M now sells products from toys, through to fashion and pets.
The retailer has also credited its rebranded ‘starburst’ fascia, introduced in 2004, as helping to deliver a strong sales performance. All new stores since 2004 have opened with the new fascia, replacing the former Bargain Madness branding. The new format also features wider aisles, better navigation, and improved point-of-sale information.
In 2010, B&M opened a £24m distribution centre in Speke, Liverpool, to support the expansion plans and the company’s head office relocated with it. This year the company agreed with Peel Ports that it would quadruple the number of containers it imports through the Port of Liverpool.
B&M is reportedly aiming for 400 stores in the UK but it is now also looking overseas for expansion. It has appointed Ernst &Young to help it find a value partner on the continent for a joint venture.
And with such big growth on the cards it is not surprising that it has received interest from private equity firms Apax, BC Partners, Kohlberg Kravis Roberts and Cinven in first round bids. Although sale talk has been dismissed by the company, if it does get sold, it won’t be at a bargain-bin price.
Who’s in charge:
- Chief Executive Simon Arora
- Finance Director Paul McDonald
- Trading Director Bobby Arora
- Director Robin Arora