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Home Bargains’ sales exceeded £2.5bn for the first time as the rapidly expanding discounter opened another 26 stores and reiterated its target of operating up to 1,000 outlets.
Revenue at TJ Morris, the retailer’s Liverpool-based parent company, rose 15 per cent to £2.5bn in the year to June 2019, meaning sales have more than doubled since 2013. Profit after tax was £184m against £164m the previous year.
The increase means that in the past financial year, the purveyor of items ranging from Halloween costumes to Haribo sweets generated more profit than Harrods, which also filed accounts on Tuesday.
The 170-year-old department store reported a net profit of £172m for the year to February, down slightly from the prior year, and for a second consecutive year paid its Qatari owners a £125m dividend.
Tom Morris, who founded TJ Morris as a single shop in 1976, this year extracted a rather more modest £10m payout from the company that bears his name. But according to The Sunday Times Rich List, the Morris family’s £3.6bn fortune now exceeds that of Sports Direct founder Mike Ashley and Arcadia’s Philip Green combined.
Mr Morris and his brother Joe are the only shareholders in the group, which boasts 506 stores despite financing its expansion entirely from cash flow and never having advertised. The brothers declined to comment.
“It’s a fantastic business, totally under the radar,” said Clive Black at Shore Capital. “Tom Morris is a down-to-earth bloke who has turned pennies into literally billions.”
Another former retail executive said that for a discounter the store standards were high. “There are always lots of staff on the shop floor. Nothing is too much trouble. They get a bonus if someone writes in to praise them.”
Its low profile is partly because of its relative lack of presence in the south of England. Although it has moved into commuter towns around the capital it still has only nine stores within the M25, where rents and labour costs are higher.
Like its listed rival, B&M — also based in Liverpool — Home Bargains has expanded rapidly via out-of-town retail parks in the North and Midlands, taking advantage of a weak lettings market. In addition to net cash of £219m at the year-end, it has more than £500m of freehold property on its balance sheet.
However, Mr Black said that while both companies were lean and entrepreneurial, there were many differences. “B&M is a lot more diverse in terms of product categories and store sizes whereas Home Bargains is very much about a limited grocery range, toiletries and household goods. That is its heartland.”
Independent retail consultant Richard Hyman said the company was unusually efficient even by the standards of discounters.
“Their warehousing is state of the art and very highly automated,” he said. “It is a really fascinating business. [The growth] isn’t a recent thing, it’s been year after year of significant outperformance.”
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