B&M lifts steering as new shops and price reducing enhance low cost retailer

B&M expects annual profits to exceed the mid-range of guidance following new store openings and bumper trading in France.

The discount retailer, which will name its new chief executive ‘in the coming weeks’, now expects to post adjusted earnings before nasties of between £605million and £625million for the 52 weeks ending 29 March.

However, this would still represent a fall on the previous year, when B&M achieved £629million in earnings before nasties.

B&M guided in November for earnings of between £620million to £660million before narrowing the top end of forecasts in January to £650million and then lowering its overall outlook in February to the current level.

The firm’s downgraded forecast reflected challenging trading conditions, economic uncertainty, and potential currency volatility on its stock and creditor balances.

Despite this, B&M’s turnover increased by 4 per cent at constant currency rates to £5.6billion last year, supported by solid demand at recently-opened shops and 7.8 per cent revenue growth in France.

Forecast: B&M anticipates annual profits exceeding the mid-range of guidance

This offset declining comparable sales in the Heron Foods supermarket chain and its UK arm, which was affected by subdued demand for fast-moving consumer goods.

B&M’s domestic general merchandise sales nonetheless rose in the fourth quarter thanks to purchases of toys, paint, stationery, and garden equipment.

Russ Mould, investment director at AJ Bell, said the business must stop the slide in domestic trade to ‘rebuild confidence and credibility with the market’.

He added: ‘B&M’s competitive position remains quite vulnerable amid pressure from other discount specialists and the supermarket sector.

‘The company continues to target an ambitious roll-out of new stores, but unless it is able to grow organically, then scepticism is likely to linger among investors.’

B&M also told shareholders on Tuesday that it would announce ‘in the coming weeks’ who will succeed Alex Russo as its next chief executive.

Russo revealed two months ago that he intended to retire at the end of April after less than three years in charge.

He initially joined B&M as its finance boss at the height of the Covid-19 pandemic in 2020, when the company benefited from a DIY boom and a shift in consumer spending towards out-of-town retail parks.

B&M was also allowed to keep its establishments open during periods of national lockdown because the firm was classed as an essential retailer.

Trading slowed following the end of Covid restrictions, but the firm’s annual turnover has climbed by almost £2billion over the past five years.

Julie Palmer, partner at Begbies Traynor, said: ‘Looking ahead, B&M’s strong store pipeline and growing international footprint offer reasons for cautious optimism.

‘Investors will be keeping a close eye on the CEO succession plan to understand how this ship is going to be steered, but B&M’s proven model and long-term growth potential leave it in a strong position as it looks to survive, or even thrive, in another period of uncertainty.’

B&M European Value Retail shares were one of the FTSE 100 Index’s top five risers by Tuesday afternoon after jumping by 2.4 per cent to 306.3p.