ii view: B&M offers more optimistic profit forecast

Full-year trading update to 29 March

• Total revenue up 3.7% to £5.6 billion
• UK same stores down 3.1%
• French same store sales up 2.6%

Guidance:

• Expects full-year 2025 adjusted profit (EBITDA) above the midpoint of £605-625 million range and compared to the prior year’s £629 million

ii round-up:

B&M European Value Retail SA (LSE:BME) today flagged expectations for annual profit to be above the mid-point of management’s previous range of between £605 million and £625 million.

Full-year revenue to late March rose 3.7% to £5.6 billion, driven by new store openings and growth in French like-for-like sales of 2.6%, but countered by a 3.1% fall in UK same store sales. Just over 775 UK stores now sit alongside 135 French stores with annual adjusted profit (EBITDA) still potentially coming in below the prior year’s £629 million.

Shares in the FTSE 250 general merchandise and food retailer rose 3% in UK trading having come into this latest news down by close to a fifth year-to-date. That’s similar to shares of JD Sports Fashion (LSE:JD.) during that time. The FTSE 250 index itself is down 7% in 2025.

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B&M sells fast moving consumer goods (FMCG) such as toiletries, candies and cosmetics at its B&M branded UK and French stores as well groceries at its 343 UK Heron Food outlets. 

Positive fourth-quarter like-for-like sales of categories including toys, paints and stationery failed to offset a fall in same store FMCG sales at its UK branded B&M outlets.

In line with management expectations, the retailer opened 45 net new UK stores during the year, as well as 14 Heron outlets and 11 new French stores.

Progress regarding the appointment of a new chief executive is being made with the group’s move to change domicile under a push to offer more flexible shareholder returns expected to complete by the end of 2025. 

Full-year results are scheduled for 4 June.

ii view:

Opening its first store in 1978 in Blackpool, B&M came to the UK stock market in June 2014. Today it employs around 40,000 people with competitors including supermarket operators like Tesco (LSE:TSCO) and Aldi, and even DIY retailers such as B&Q owner Kingfisher (LSE:KGF). The group’s UK variety stores account for most sales at 80%, with the balance of 20% split relatively evenly between Heron and its French stores.  

For investors, the challenging economic backdrop for its customers including elevated borrowing costs cannot be forgotten. As with all retailers, the weather can influence demand. UK business costs have increased following the raising of employee taxes, while the previous retirement of key directors influential in the group’s growth journey generates some caution. 

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On the upside, store numbers continue to grow. A diversity of product and geographical location exists with potential to increase French store numbers. A review of the corporate domicile could see increased flexibility given to shareholder returns and potential share buybacks, while a forecast dividend yield in the region of 5% is not to be overlooked.

In all, and despite continued risks, a consensus analyst fair value estimate above 425p per share is likely to keep the shares of interest to higher risk investors willing to back a recovery.

Positives: 

• Diversified product range
• Previous payment of special dividends

Negatives:

• Uncertain economic outlook  
• Exposure to currency movements 

The average rating of stock market analysts:

Buy