Like its publicly listed counterparts, B&M has endured a difficult time on the stock market since Britain’s vote to quit the EU.

The Liverpool-headquartered discounter saw its share price dive following Brexit, and despite a rally it is hovering near to its lowest point of this year. 

Like many other retailers, B&M sources a chunk of its product in dollars, which is likely to affect margins in the long term.

However, as B&M prepares to report its half-year figures next Tuesday, there are plenty of positives for boss Simon Arora.

First, as we sit on the edge of an economic downturn – however severe that may be – B&M looks set to benefit.

“B&M will be hoping to repeat the trick that saw it flourish during the last downturn and make a name for itself”

As consumers continue to be wracked by uncertainty – partly over how Britain might exit the EU – they will inevitably continue to watch the pennies.

“Market share gains for discounters are almost inevitable in tough retail times,” say analysts at PeelHunt.

B&M will be hoping to repeat the trick that saw it flourish during the last downturn and make a name for itself.

And out of all the discounters operating, PeelHunt believes B&M is – along with Home Bargains – the best-placed to capitalise.

B&M vs Poundland

The weaker pound will be “less of a problem” for B&M, PeelHunt argues, as the retailer is hedged until the end of its financial year. It also frequently refreshes its ranges and has impressive volume growth.

B&M’s strong relationships with its suppliers and reputation for being a professional company to deal with should stand it in good stead in negotiations, the broker says.

But what of B&M’s rivals? Can they not capitalise in the same way as consumers feel the pinch?

Poundland is the most high-profile competitor. But the big beast of the value jungle is in a slight state of flux, with new owners, a chief executive who has just walked out to join Sainsbury’s and the 99p Stores estate still to deal with.

I’m aware that it’s a source of frustration for Simon Arora that his business is compared to Poundland, which is a single-price retailer.

But Poundland appears to be encroaching on B&M’s turf as it moves towards a multi-price format.

The retailer, which is now being run for Steinhoff by former Asda boss Andy Bond, has admitted it is selling products above £1 – some think to cope with Brexit.

It has also been piloting a multi-price format called Poundland & More.

Store push

B&M also appears well placed from a property perspective. Its target of 850 UK stores remains in tact and it has already opened an estimated 30 new stores this financial year.

Interestingly, according to PeelHunt, the joint biggest source of new space is new-builds, along with former B&Qs.

Garden centres as part of these stores have been a focus, where B&M feels it can make hay by undercutting its competitors, according to PeelHunt.

“We hear anecdotally that some of the smaller discount chains may have to raise prices as they have less advanced hedging techniques than B&M”

PeelHunt

B&M also might be able to pounce on underperforming rivals’ stores.

“We hear anecdotally that some of the smaller discount chains may have to raise prices as they have less advanced hedging techniques than B&M,” says PeelHunt.

“This could bring into question the longevity of a number of their outlets, some of which would be of interest to B&M.”

From a financial perspective, B&M’s like-for-likes have slowed, while Arora has admitted some “cannibalisation”. 

But its bottom line appears healthy, and with the backing of former Tesco boss Terry Leahy as chairman, the retailer looks well set for future gains.