B&M European Value Retail Reports Q3 Results

B&M European Value Retail SA (LON: BME), the leading high-value retailer in the United Kingdom, announced its third-quarter financial results on Thursday.

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Strong Performance Across Categories

The variety retailer said its revenue in the 13 weeks leading up to December 25 increased 0.1% year-over-year on a constant currency basis to reach £1.40 billion.

B&M said it had a strong performance across all categories, with excellent seasonal line sales supporting gross margins. It also benefitted from the sustained momentum of B&M France with a revenue of £108.8 million, up 30% from £83.7 million the previous year.

However, B&M UK’s total revenue is still lagging behind, down 2.5% to £1.18 billion from £1.21 billion a year earlier.

The retailer said nine new B&M raw fascia stores in the U.K. opened in the third quarter, with two closures. It plans to open 13 more before the end of the current fiscal year.

The performance of its Heron Foods business improved slightly, with sales growing 2.2% to £105.2 million from £102.9 million a year earlier.

B&M now expects adjusted EBITDA of between £605 million and £625 million, ahead of current analysts’ estimate of £578 million.

Management Commentary

B&M chief executive officer Simon Arora said, “The Group has delivered a very strong Golden Quarter, with our two-year like-for-like performance demonstrating strong retention of new customers. Our decision to take receipt of imported Christmas stock early in the season meant we were able to provide customers with great products at great prices. The consistency of performance in the core B&M UK business reflects the growing appeal of our stores as a destination visit for seasonal products, as well as the strength of our supply chain. I would like to thank all of our colleagues for helping to deliver our best-ever Christmas.

“Although the pandemic continues to create challenges for retailers and consumers alike, our relentless focus on value-for-money remains undiminished. Despite ongoing supply chain disruption, inflationary pressures and uncertainty surrounding possible Covid-related restrictions, we remain confident in B&M’s prospects for 2022.”

Wall Street’s Take

Last month, RBC Capital analyst Richard Chamberlain kept a Sell rating on BME with a 575p price target. This implies 7.3% downside potential.

Overall, consensus among financial analysts is that BME is a Hold based on three Buys, three Holds, and three Sells. The average B&M European Value Retail price target of 610.63p implies 1.5% downside potential to current levels.

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