B&M ticks "all the right boxes" as forecasts top-end annual profit

(Alliance News) - B&M European Value Retail SA pleased analysts on Tuesday after stating it expects annual profit at the "top end" of its earlier guidance.

Analysts at Liberum said this is a "very strong outturn, which contrasts very positively to much of the reporting we are seeing across the rest of the sector."

Nonetheless, shares in B&M were down 2.6% to 497.55 pence each in London, mostly tracking the wider FTSE 100 index, which was down 1.5%.

For the 53 weeks ended March 30, the Luxembourg-headquartered variety goods retailer said revenue rose 10% annually to GBP5.5 billion.

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 it saw "volume growth and positive like-for-like" over the course of the year, which also benefitted from an extra week and early Easter timing.

It expects adjusted earnings before interest, tax, depreciation and amortisation will rise 9.8% to GBP629 million, the top end of its GBP620 million to GBP630 million range. This is up 9.8% from GBP573 million a year earlier.

Liberum said the update "ticks all the right boxes, giving us confidence in the runway for long-term compounding growth."

Peel Hunt analyst Jonathan Pritchard noted that fourth-quarter comparable sales growth in the UK of 2.9% was stronger than the third quarter's 1.2%, albeit the comparative was easier and it is unclear the degree to which Easter boosted things.

He thinks this is probably a better outcome than the market had been fearing, as the weather has been unhelpful for seasonal products so far this spring/summer.

B&M's new store opening programme has been delivered and the performance of the new Wilko stores is ahead of expectations, he added. Back in September, B&M agreed to buy 51 properties of failed peer Wilko for up to GBP13.0 million.

Pritchard noted B&M's profit guidance is "nicely at the top" of the previous range.

"All in all, a solid set of numbers and one that the market will probably enjoy, as the shares have been pretty weak into the numbers," he stated.

Liberum has a 'buy' rating on B&M, as does Peel Hunt.

By Jeremy Cutler, Alliance News reporter

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