Retailer B&M warns of price rises as pound slump hits import costs
Discount retailer B&M has warned that shoppers will have to stomach rising prices next year as sterling's slump hits import costs.
The firm was able to shield customers from a price jump this year after hedging against currency swings, but said it will have to pass on cost rises from spring 2017.
B&M, which has 519 stores across the UK, said it will feel the impact of the Brexit-hit pound because 30% of its products are sourced from China.
Sterling has fallen nearly 20% against the US dollar and around 15% versus the euro since the EU referendum result, making UK goods more competitive on the export market, but bumping up the cost of imports coming into the country.
It comes as the retailer broke above the £1 billion mark, with revenues rising 18.9% to £1.1 billion i n the 26 weeks to September 24.
Pre-tax profits jumped 10.4% to £73.7 million for the half year, as the firm continued to aggressively expand its number of stores.
The firm opened 20 new stores over the period and has a further 50 in the pipeline before the end of this financial year.
Chief executive Simon Arora said the retailer's third quarter sales had "started solidly" as it braces itself for the key Christmas trading period.
He added: "Naturally, we are mindful of the current economic uncertainties in the UK but given the strength of our retail model and with the full benefits now flowing from the step change investments we made last year in our store opening programme and new supply chain capacity, we are confident of meeting expectations during the remainder of this year."
UK like-for-like revenues rose 0.2% over the period, with sales in some stores coming under pressure when another B&M outlet was opened nearby.
Shares in B&M were up more than 2% on the London Stock Exchange.
Chairman Sir Terry Leahy, the former chief executive of Tesco, said the retailer was "equipped to prosper in a challenging and uncertain retail environment".
"B&M has a proven strategy for growth with plenty of opportunity for high returning store expansion in our chosen markets, and we can fund that investment comfortably from our internal cash resources."