Shares in variety goods value retailer B&M European (BME) gave up their position at the top of the UK leader board , reversing early gains of 2.5% to trade down 1.3% at 626p despite having raised its full year guidance.
B&M was one of the retailers that Shares thought might have a good Christmas in terms of sales due to an increase in footfall at retail parks, but while that was the case investors took to the sidelines concerned that the Federal Reserve would accelerate US rate rises.
GAINING GROUND
In a trading update, the firm showed a fairly resilient performance. It reported a 0.1% decline in group like for like sales in the third quarter to December with a strong performance from its French business offsetting UK like-for-like revenues which were lower due to strong prior-year comparables.
Other highlights were a strong sell-through of seasonal ranges in the run-up to Christmas, which helped keep gross margins up, and a decent performance from the Heron Foods subsidiary.
On a two-year basis, a yardstick increasingly being used by retailers to compare their performance post and pre-pandemic, UK B&M store revenues were up 14% on a like-for-like basis suggesting the firm has gained in popularity with shoppers.
‘The consistency of performance in the core B&M UK business reflects the growing appeal of our stores as a destination visit for seasonal products, as well as the strength of our supply chain,' said chief executive Simon Aurora.
He added, ‘The group delivered a very strong Golden Quarter, with our two-year like-for-like performance demonstrating strong retention of new customers.’
RAISED OUTLOOK
Thanks to solid trading during the quarter, the firm now sees full year EBITDA (earnings before interest, tax, depreciation and amortisation) in the region of £605 million to £625 million against consensus forecasts of £578 million. The company has a March year-end.
Shore Capital analyst Eleonora Dani was reviewing her price target on the shares in the light of the latest upgrade, commenting: ‘B&M is a well-run company with a clear customer proposition and a growth story centred on further store rollout with a capital-light model with a fast payback.’
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