9th Nov 2023 15:17
(Alliance News) - Cheaper and cheerful B&M European Value Retail SA fell on Thursday, despite a solid set of results, as well as upgraded results.
"Despite upgraded guidance on earnings and store roll-out ambitions, discount retailer B&M was out of favour with the market on its latest update," said AJ Bell's Russ Mould.
Shares in B&M fell 5.1% to 510.40 pence each in London on Thursday afternoon. Over the past 12 months, however, the stock is up 36%.
The Luxembourg-based variety goods value retailer reported that pretax profit increased 11% to GBP222 million in the first half ended September 30, from GBP201 million the year prior. It said its garden & Outdoor trading periods in its UK business were "critical" to the profit increase in the first half.
It said revenue increased 10% to GBP2.55 billion in the period, from GBP2.31 billion a year ago. The company said it saw growth across the board, noting that its newly opened stores also performed well.
The firm declared an interim dividend of 5.1 pence per share, up 2.0% from 5.0p previously.
Looking forward, B&M said given its strong results in the first half of the year, as well as positive momentum, it confirmed its guidance for earnings before interest, tax, depreciation and amortisation to between GBP620 million and GBP630 million - previously it said it expects Ebitda above that of financial 2023. In financial 2022, the firm posted revenue of GBP573 million.
"With value firmly stamped on the brand, it's well positioned to lure in cash-strapped shoppers through the festive season and trading momentum is strong. From groceries to frozen food, gifts to garden furniture, the razor-sharp focus on price appears right now to be a winning formula," said Hargreaves Lansdown Susannah Streeter.
"Instead of films crafted by ad agencies, its twitter and Instagram feeds are full of cheap and cheerful videos with ideas about the best gifts to buy children for under GBP5. With Instagram followers topping 1.5 million, a third more than John Lewis, its cheap and cheerful way of spreading its Christmas sales message, may end up bringing more bang for the buck."
Despite this, investors found fault in B&M's lasted update, sending its stock to the bottom of the FTSE 100 index.
"A proposition of selling a range of discounted goods should chime with households which are looking to save money, so perhaps there was some disappointment at relatively sluggish like-for-like growth in the first six weeks of its 'golden quarter', even if the picture in the last three weeks has been more encouraging," Mould commented.
"An admission that volatile market conditions make forecasting tough may also have been in the minds of investors."
By Sophie Rose, Alliance News senior reporter
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