Liverpool-based FTSE 100 firm B&M European Value Retail S.A. on Thursday upgraded its full-year profit forecast after a strong third quarter and said it will pay a 20p per share special dividend on February 3 worth about £200 million to shareholders.
B&M said its revenue growth was 12.3% year-on-year to £1.567 billion in the third quarter of its current financial year — the 13 week period to December 24, 2022.
The firm said its FY23 group adjusted EBITDA is now expected to be in the range of £560 million to £580 million, ahead of current analysts’ consensus estimate of £557 million.
B&M is based in Liverpool and registered in Luxembourg — but its shares trade in London, where its stock rose about 1%.
B&M CEO Alex Russo said: “Our strong momentum throughout the Golden Quarter across the businesses demonstrates the strength of our unchanged strategy to relentlessly focus on price, product and excellence in retail execution.
“Despite the challenging macroeconomic environment, we will continue to work hard to help both existing and new customers manage the cost-of-living crisis.
“The business has exited the quarter well and will remain focused on disciplined execution.”
REACTION:
AJ Bell Investment Director Russ Mould: “B&M appeals to people who want to trade down from more expensive retailers, showing that the value proposition from a pricing perspective is a winning model in the current environment.
“Importantly, it talks about improved gross margins and more efficient supply chains, two areas which have been problematic for the retail sector in the past year.”
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown: “The appetite for bargain hunting has increased sharply amid the big cost-of-living squeeze with shoppers flooding into discount stores.
“B&M European Value retail is benefitting from this trend with its cut-price products piled high in baskets during the pre-Christmas period.
“Faced with sky-high grocery prices, shoppers are clearly pinching the pennies wherever they can. Comparable UK sales rose 6.4% and strong demand for homeware and other non-food ranges, which have been trickier to shift, helped lift margins.
“Group revenues rose 12.3% to £1.56 billion and the company have rolled out more festive cheer by announcing the intention to pay a special dividend of 20p per share in February.
“It’s not just in Britain where the consumers have developed a razor sharp focus on value as across the group’s stores in France revenue surged by almost a quarter.
“Although shopper habits in the months ahead will still be hard to predict, there are some encouraging signs across the retail sector that consumer confidence is continuing to recover which should buoy up spend, particularly on the little treats which the discount stores are so good at shifting.’’
Victoria Scholar, head of investment, Interactive Investor: “B&M announced plans to return cash to shareholders through a special dividend of 20 pence per share in February as it reported like-for-like revenue up 6.4% over the festive quarter.
“Group Q3 revenue rose by 12.3% to £1.57 million with B&M France outperforming with revenue up almost 25% year-on-year. B&Mexpects full-year core earnings of £560-580 million, above analysts’ expectations for £557 million.
“Although the overall UK retail sector looks set to slow further amid the macroeconomic challenges of a looming recession and double-digit inflation, B&M’s is well positioned to navigate the downturn as consumers turn to its cheaper product range as lower disposable incomes spur customers to hunt for a bargain.
“B&M has also succeeded in terms of stock discipline, reducing its inventory levels while the retailer’s flexible sourcing model and supply chains performed well during the quarter.
“Shares in B&M have regained strength over the last six months.
“Plus, shares are extending gains today with investors buying the stock on the back of its dividend, upbeat full-year outlook and defensive properties which should help to weather the macroeconomic storm.”