Shares in low-priced variety goods retailer B&M European Value (BME) dropped 3.3% to 559p after the firm posted a disappointing sales update for the first quarter to the end of June.
Group revenues were up 3% to £1.19 billion thanks to new store openings in the UK and a rebound in France, where the first quarter last year was impacted by varying lockdown measures.
However, like for like sales for the core UK business - excluding the new stores - were down 4.4% on the same period last year. The firm had already hinted first-quarter sales weren’t keeping pace when it posted its full year results in June.
TOUGH COMPARISONS
B&M described trading conditions during the quarter as ‘volatile’, with good weather in late March - ie at the end of the previous quarter - and early April bringing demand for gardening products forward and depressing sales in subsequent weeks.
Blaming the weather for bad sales is slightly lame in our book. More to the point, in April to June last year like for like sales were up 27% as B&M was designated an ‘essential retailer’, so the annual comparison was always going to be tough.
Also, as we suggested in March, post reopening B&M was unlikely to be a ‘must-go’ venue for shoppers compared with shops which had been shut for the duration.
The business faces a slightly easier comparison in the July to September quarter as core UK like for like sales last year were up 19%, but it remains to be seen whether it can continue to draw in customers at a higher rate than last year.
Analysts at Shore Capital commented: ‘While B&M is a solid business that highly benefitted from the pandemic, we are conscious of the tough comps the business faces this year. Still, we see the business as a well-managed company with sound cash generation, tight stock and cost controls.’
