B&M: Revenue ticks up as new stores outperform
Discount retailer B&M has reported a bump in its full-year earnings after progress in France and a better-than-anticipated performance at its new stores.
The London-listed Luxembourg-headquartered company reported revenue of £5.57bn in the 52 weeks ended March 29, up 3.7 per cent year on year.
It said the higher revenue was “primarily driven” by the contribution from new stores.
B&M opened 70 gross new stores during the year – 45 in the UK, 14 in Heron Foods and 11 in France – with its pipeline “well-set” for next year.
It now operates 777 shops and 343 Heron Foods stores in Britain, plus 135 shops in France.
The company’s French arm outperformed its UK arm and Heron Foods, with the former reporting revenue growth of 7.8 per cent versus 3.8 per cent in the UK and a drop of 0.6 per cent at Heron.
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 international revenue grows
Revenue growth in all three B&M arms slowed significantly from last year – particularly in France – although B&M’s adjusted operating profit margin rose by around one per cent in each area.
Earnings before interest, tax, depreciation and amortisation (EBITDA) reached £619m, above the midpoint of its £605m-£625m guidance range and in line with expectations forecast in April.
Adjusted operating profit fell 1.8 per cent to £591m, due to higher depreciation and adjusting items.
A dip in profit before tax, from £498m to £431m this year, was due to increased interest and finance costs, B&M said.
Panmure Liberum analysts rated the stock a ‘Buy’, with a target price of 600p.
Its share price was 333.22p at the close on June 3. Its share price has dropped 1.79 per cent in the last month and nearly seven per cent in the year to date.
“The shares have done better the past couple months but remain cheap,” analysts said, adding that they were looking for “confirmation that underlying trading is positive”.
However, AJ Bell analyst Russ Mould said the chain should have done better given the market conditions.
“It should have mopped up extra business from people trading down from more expensive options, while also being a shop of choice for cash-strapped individuals wanting bargains.