B&M Bargains owner B&M European Value Retail posted record sales and profits this week as new store openings and rising volumes kept the tills ringing – but shareholders were spooked by a lack of clarity on guidance and current performance.
Posting its annual results on Tuesday, the discounter reported total group revenues in the year to 30 March were up 10.1% year on year to £5.5bn.
Overall revenues were boosted by an extra week of trading, which added 2.3% to group revenues, as well as an early Easter.
However, all fascias also delivered volume growth through both positive like-for-like customer transaction numbers and new space.
The group opened 78 gross new stores across in the period – 47 in B&M UK, 20 in Heron Foods and 11 in B&M France. The B&M brand in the UK was up 8.5% annually to £4.4bn, with like-for-like revenues up 3.7%. Heron Foods saw even stronger sales growth of 15.3% to £485m, while B&M France was up 19.2% to £431m.
The booming growth bolstered group adjusted EBITDA by 9.7% to £629m. The gain was also underpinned by productivity gains related to higher transaction numbers, which helped reduce cost-to-sell percentages. Group adjusted operating profit increased by 10.9% despite continued investment in its store estate, which resulted in a net increase of 60 stores across the group.
It also pledged to open “not less than” 45 gross new B&M stores in the UK in the current year, plus a “meaningful” number in France and for Heron, while raising its long-term store target to no less than 1,200 B&M UK stores, from 741 now.
Russell Pointon, director of consumer at Edison Group, welcomed the “strong” results. Adjusted EBITDA at the top end of the guided range reflecting “robust operational performance and strategic growth initiatives”, he said. “Overall, B&M’s results reflect a well-executed strategy and solid financial footing,” he summed up.
However, B&M shares fell 7.3% on Wednesday and a further 1.5% by Thursday lunchtime to reach 499.1p – the stock’s lowest level since April.
Shore Capital’s Clive Black noted a lack of current trading statement alongside the results “may not be especially helpful in some quarters”. “We wonder if B&M is starting to find life tougher against the value-based superstores, , especially around loyalty pricing, whilst the grocery discount chains also rollout space” he said.
“All in all, a very backward looking update that we sense could spook the market if management cannot reassure through its near-term investor interaction.”
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