5th Jun 2024 10:58
(Alliance News) - B&M European Value Retail SA results statement was a "curious" statement that could "spook" investors, an analyst on Wednesday said.
In the 53 weeks that ended March 30, the Luxembourg-headquartered variety goods retailer said pretax profit rose 14% to GBP498 million from GBP436 million a year prior. Earnings per diluted share rose 5.2% to 36.5 pence from 34.7p.
Revenue increased by 10% to GBP5.48 billion from GBP4.98 billion a year ago.
Comparative figures are for the 52 weeks ended March 25, 2023.
Despite this growth, shares in B&M were down 6.1% to 513.20p in London on Wednesday morning. The wider FTSE 100 index was up 0.1%.
Revenue in B&M UK climbed 8.5% to GBP4.41 billion. In France, it surged 19% to GBP514 million. At Heron Foods, it increased 15% to GBP560 million. The retailer's Heron Foods arm largely sells frozen goods.
B&M said revenue was driven by like-for-like growth of 3.7% in the core UK business and by new store openings that saw 47 gross new B&M stores open in the UK, 11 in France and 20 in Heron.
"Importantly, almost half of the B&M openings in the UK were in the fourth quarter, meaning the majority of the benefits to sales, cash and profits will be felt in the current financial year," the company pointed out.
B&M said it intends to open between 15 to 20 UK stores in the first quarter of financial 2025 as it continues to progress towards the long-term target for 1,200 B&M UK stores.
But Shore Capital analyst Clive Black felt it was a "curious statement".
He noted there was "much mention of volume growth but we are simply unclear how LFL volumes have come through".
Black wondered whether it is wise to speak to around 1,200 stores in the UK, "hostage to fortune comes to mind, as competition, attrition and cannibalisation must build."
"We worry about the over-expansion of the B&M network in the UK albeit we can see scope for much growth with a careful roll-out in France," he added.
Black also wondered if B&M is starting to find life tougher against the value-based superstores, especially around loyalty pricing whilst the grocery discount chains also roll-out space.
"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," he suggested.
By Jeremy Cutler, Alliance News reporter
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