Shares of Liverpool-based bargain retailer B&M European Value Retail fell about 6% on Friday after it published a trading update for the 13 week period to December 28 that included “disappointing” sales in its toys and seasonal confectionery.
In November, B&M wrote down the value of its loss-making German business Jawoll and put it under review.
On Friday, B&M said “on an actual currency basis” total sales revenue increased 9.0% to £1.19 billion for the quarter.
“B&M UK stores business sales revenue in the 13 week period increased by 8.8% to £957.4m (2018: £879.9m) with LFL sales of +0.3%,” said B&M.
“Our LFL performance was held back by disappointing sales across the Toys & Seasonal Confectionery categories, which was offset by continued strength and outperformance across our Home Departments.
“We refrained from participating in any early or unusual discounting activity over the quarter and remained focused on our cash margin. Inventory levels are also normal for the time of year.
“Heron Foods has continued to have a pleasing performance with revenues growing by 6.2% to £95.6m (2018: £89.9m) in the quarter …
“Our French business, Babou, increased revenues by +29.3% on a constant currency basis, of which 26.1% related to the non-comparable period of ownership last year.
“Jawoll’s revenues were -1.5% at £53.0m (2018:£55.3m) on a constant currency basis.
“We are continuing with the strategic review process that was announced on 12 November 2019.
“Further information in relation to the outcome of that process will be given in due course.”
B&M CEO Simon Arora said: “Against the backdrop of a difficult UK retail environment with reduced shopper footfall and political uncertainty, our core B&M UK business generated continued growth and delivered a record level of peak season sales.
“Cumulatively, B&M UK has achieved +2.3% LFL sales growth during the financial year to date, albeit with a slower performance than anticipated during the run up to Christmas.
“Overall the business delivered a good quarter operationally.
“Costs were well controlled and, combined with our usual strong focus on cash gross margins, yielded a profitable outcome.
“We were also able to exit the period with normal seasonal inventory levels.
“Our new store programme delivered 15 gross and 12 net new B&M UK stores in the quarter, and this year’s openings as a whole have performed better than expectations.”