9th Jan 2024 14:24
(Alliance News) - B&M European Value Retail SA on Tuesday praised its "golden quarter", the 13 weeks leading up to Christmas, but it was not enough to get investors excited.
The Luxembourg-headquartered variety goods retailer declared a special dividend as sales rose by 5% on a year before in its "golden quarter", the 13 weeks leading up to Christmas.
"The performance across the golden quarter has been pleasing, with strong operational execution across the three businesses," said Chief Executive Alex Russo.
B&M said revenue in the three months from September 24 to December 23, the company's financial third quarter, was GBP1.65 billion, up 5.0% from a year before. UK revenue was GBP1.35 billion, up 3.7%. Revenue in France was GBP151 million, up 11%, and revenue at Heron Foods was GBP144 million, up 12%.
Like-for-like revenue growth in the UK in the 14 weeks that ended December 30 was 1.2%.
In the financial year to date, total revenue was GBP4.19 billion, up 8.1% on a constant currency basis. B&M UK revenue was GBP3.40 billion, up 6.3%; B&M France revenue was GBP383 million, up 20%; and Heron Food revenue was GBP416 million, up 15%.
This means that sales growth over the Christmas quarter has slowed from a 6.2% annual increase over the first half.
Victoria Scholar, head of investment, interactive investor, said this has "sparked nervousness among investors about a broader slowdown in retail demand amid the weak consumer backdrop."
Meanwhile, AJ Bell's Russ Mould commented: "B&M is a general merchandise group and has its fingers in many pies, meaning it is a good bellwether for the retail sector. A slowdown in sales growth has become a common theme in the retail industry, particularly among fashion sellers. While disappointing that B&M has joined the club, it is not alone in suffering this fate."
Looking ahead, CEO Russo said B&M is well positioned for the full financial year, confirming guidance for adjusted earnings before interest, tax, depreciation and amortisation of GBP620 million to GBP630 million, up from GBP573 million in financial 2023.
B&M also said it is on track to open 76 new stores in the current financial year, including 45 in the UK, 11 in France, and 20 in its Heron Foods arm. B&M currently has 717 stores in the UK, 122 in France, and 331 under the Heron Foods and B&M Express brands.
B&M also declared a special dividend of 20.0 pence per share, to be paid in February.
AJ Bell's Mould said investors "can find reassurance" in the special dividend, saying the "dividend may not have been declared if management was feeling worried about the outlook."
"Yet the market reaction to the trading update understandably portrays a tone of disappointment on behalf of investors," he added.
On B&M's outlook, Russell Pointonat Edison Group, said: "B&M's ability to navigate economic uncertainties and focus on its everyday low-price approach positions it well for future success, emphasising a strong outlook and strategic execution."
B&M shares were up 0.8% to 566.00p each at the London open on Tuesday. The stock is up 26% over the past year.
By Sophie Rose, Alliance News senior reporter
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