B&M European Value Retail has acquired 51 Wilko stores out of administration for £13 million, boosting its store count and expanding its high street presence.
The acquisition is expected to be beneficial for B&M as it will allow the company to cherry-pick Wilko’s most profitable stores, which will help it achieve its goal of reaching 950 stores.
Analysts suggest that B&M’s focus on out-of-town locations means that it can incorporate many of Wilko’s high street stores and locations with limited cannibalisation impact.
From an assortment perspective, there is a high degree of crossover between Wilko and B&M in households, garden, toys, and accessories.
Quite often, Wilko and B&M sell the same product, meaning consumers have a strong incentive to continue frequenting those stores regardless of the brand. However, it is not yet clear how many jobs will be saved by B&M’s move.
Analysts suggest that a good chunk of positions should be salvaged, but B&M is likely to want to run a highly efficient ship to squeeze as much profit out of the floorspace.
The acquisition of Wilko’s stores is expected to help B&M boost its expansion ambitions and grow its discount retail chain.
However, regulatory clearances are still required before the deal can be completed. B&M’s acquisition of Wilko’s stores is also expected to have an impact on the high street, with some experts predicting that it could lead to further store closures and redundancies among high street retailers.
Shares in B&M were initially downgraded by JP Morgan, along with Tesco and Sainsbury’s. However, the Wilko deal saw the stock regain some ground. Some investors are hoping that the acquisition could be a spur to sales growth, especially given how focused consumers are on seeking out value right now.
Overall, B&M’s acquisition of Wilko’s stores is expected to be beneficial for both companies as it will allow B&M to expand its high street presence and grow its discount retail chain while also providing Wilko with a much-needed lifeline.
