B&M: Poor UK sales weigh on earnings for bargain retailer
Discount retailer B&M expects full-year earnings to fall year on year as poor UK sales weigh on overall company performance.
However, the company told markets this morning that it expects to report earnings before interest, tax, depreciation and amortisation (EBITDA) above the midpoint of its £605m-£625m guidance range.
It reported EBITDA of £629m for the year ending March 30, 2024, which was up 9.8 per cent year on year and at the top end of its guidance.
EBITDA of £615m this year would represent a 2.2 per cent fall year on year.
However, the company expects overall revenue to rise by about 3.7 per cent due to revenue growth from new store performance, good sales in France and productivity gains.
B&M, which operates 777 B&M shops and 343 Heron Foods stores in Britain, plus 135 B&M shops in France, said that UK like-for-like sales fell by 3.1 per cent during the year.
Like-for-like sales in France grew by 2.6 per cent year on year, it said.
The UK consumer environment has been negatively impacted by economic uncertainty, as well as low confidence due to inflation and high bills, despite wage hikes.
B&M opened 45 gross new stores during the year, in line with previous guidance.
The retailer said its new stores are “performing in line with our expectations and are generating strong returns”.
Panmure Liberum analysts rated the stock a ‘Buy’, adding that the year was “tough” but that there was “huge value of offer”.
“Shares have been poor [and] look very cheap… but we acknowledge a return to positive LFL in the UK needed for confidence to change,” analysts said.
B&M’s share price has fallen by nearly 27 per cent in the last six months and more than 41 per cent in the past year.