Analysts’ views: B&M, Auto Trader

Here are the views of some of the UK’s leading business analysts on the news published by North of England listed companies on Thursday:

Russ Mould, Investment Director at AJ Bell, on first-half results from Liverpool’s B&M: 

“B&M had a good pandemic as it was able to stay open thanks to its food offer when other rivals could not.

“In theory the current environment should also be supportive as its discounted offering chimes with a consumer struggling to make ends meet.

“To some extent this is the case and is reflected in a positive outlook for festive trading alongside first-half results with the company already shining in what B&M calls its ‘Golden Quarter’.

“However, there are signs of margin pressure on the business. An uncharitable takeaway is that B&M doesn’t have a great degree of pricing power, a prized quality right now.

“When your whole model is about offering products at bargain prices, you probably have to absorb some of the extra cost so the brand’s reputation for value isn’t undermined.

“There are also signs that B&M has been caught out by unpredictable weather and left with stock which it has had to sell at big markdowns.”

Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown, on first-half results from Manchester’s Auto Trader:

“Auto Trader is accelerating into the second half with excellent momentum. Performance in the first half saw revenues and profits come in better than expected, which is a function of Auto Trader’s enviable recurring revenue, strong pricing power and highly profitable model.

“Running a website doesn’t cost a lot, after all. Underlying operating margins north of 70%, with strong conviction that these can be maintained, are an asset very hard to find in the current environment.

“The group’s plan to digitise the car buying journey, from selection to leases and payments, have real merit. As Auto Trader looks for growth levers to pull, this is an admirable on.

“As market share goes in the car retail business, Auto Trader is rapidly bumping up against the side of the tank, so alternative plans for growth are needed.

“While progress and ambitions can’t be knocked, it’s highly likely those strengths are already reflected in the share price.”