Shockwaves swept through the retail industry today after the CEO of B&M Value Retail became the second boss to cash out a significant chunk of his stock in as many days.
SSA Investments, the family office of B&M CEO Simon Arora, sold 40 million B&M shares overnight for 585 pence, a 1.8% discount from Thursday’s closing price.
SSA manages the fortunes of Arora and her brothers Bobby and Robin. Simon and Bobbby bought the discount chain in 2004 and helped transform it from a struggling regional brand into a retail Goliath. The couple and their brother Robin, who sit on the board, have an estimated net worth of £ 2.5 billion.
The overnight stock sale, organized by Goldman Sachs, raised £ 234million for the brothers. The piece represents 4% of the company’s outstanding shares and leaves the Aroras with 7% of B&M.
A spokesperson declined to comment on the reason for the sale.
Nick Bubb, an independent retail analyst, said: “Investors who participated in the last placement of B&M shares by SSA Investments, the Arora family’s investment vehicle, a year ago – 40 million shares at 545 pence – fared rather well, as shares closed at c597p last night, but, given the recent change in sentiment against retailers, many will have moaned at the news overnight that the Arora family now wants to sell 40 million more shares.
Shares fell 19.2p, or 3.2%, to 577.4p today, leaving it near the low of the FTSE 100.
B&M is the second major retailer to see a top executive cash in as many days. JD Sports executive chairman Peter Cowgill surprised the market Thursday afternoon by halving his attendance. Cowgill has raised just over £ 20million by selling 10million shares. The move sent JD’s stock down 7% yesterday, although it recovered 2.75p to hit 200.7p this morning.
The sales will leave many investors wondering if this could be the top after what has been an exceptional Christmas for most. Retailers, including JD and B&M, have made many improvements to their profits over the past fortnight. The sector faces a much more uncertain year 2022 as soaring energy costs weigh on household finances.
A collapse in retail stocks over the past two days has caused the UK listed sector to plummet by £ 1.6bn in what most see as profit taking.
B&M will likely fare better than most in any cost-of-living compression, given that it focuses on the discount market.