B&M’s Share Price Hits 8-Month Highs, Earnings Tipped To Beat Forecasts

Shares in B&M European Value Retail rose to their most expensive since May 2022 as the company announced full-year earnings will beat analyst forecasts.

The discount retailer rose as high as 455p per share before settling back to 448.6p, up 0.8% on the day.

B&M announced that group revenues rose 12.3% in the 13 weeks to December 24, to £1.6 billion.

Sales at its B&M-fascia stores in Britain rose 10.3% year on year, with like-for-like sales increasing 6.4%. The firm said it had enjoyed a “very good performance” across all its grocery and general merchandise categories, while “excellent sell-through in key general merchandise ranges” pushed gross margins higher.

Third-quarter turnover at its French B&M units jumped 24.9% in the period, whilst takings at Heron Foods increased 22.5%.

The business had 1,133 stores in operation as of Christmas Eve, an increase of 23 from the same 2021 period. These comprised 705 B&M-branded stores and 315 Heron Food outlets in the UK, and 113 B&M stores in France.

Forecasts Raised

Chief executive of the FTSE 100 firm, Alex Russo, commented that “our strong momentum throughout the Golden Quarter across the businesses demonstrates the strength of our unchanged strategy to relentlessly focus on price, product and excellence in retail execution.”

He added that “despite the challenging macroeconomic environment, we will continue to work hard to help both existing and new customers manage the cost-of-living crisis.”

B&M said that it now expects to generate adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of between £560 million and £580 million for this financial year to March 2023.

This is ahead of a current broker consensus estimate of £557 million, the company said.

Russo said that “the business has exited the quarter well and will remain focused on disciplined execution.”

Special Dividend On The Way

On the back of those strong third-quarter results B&M announced plans to pay a 20p per share special dividend in February.

Commenting on Thursday’s results Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, noted that “the appetite for bargain hunting has increased sharply amid the big cost-of-living squeeze with shoppers flooding into discount stores. B&M European Value retail is benefitting from this trend with its cut-price products piled high in baskets during the pre-Christmas period.”

She added that “although shopper habits in the months ahead will still be hard to predict, there are some encouraging signs across the retail sector that consumer confidence is continuing to recover which should buoy up spend, particularly on the little treats which the discount stores are so good at shifting.”