B&M profit plummets but beats forecasts while UK sales slump slows

(Alliance News) - B&M European Value Retail PLC on Wednesday reported a nearly 50% fall in annual profit, after a "difficult" year, although the decline in UK comparable sales showed some signs of easing.

The Jersey-based variety goods chain in the UK and France reported pretax profit of GBP227 million for the financial year that ended March 28, down 47% from GBP431 million the year before.

Adjusted earnings before interest, tax, depreciation and amortisation fell 26% to GBP459 million from GBP620 million, ahead of GBP450 million Visible Alpha consensus, and in line with the midpoint of B&M's lowered guidance of GBP440 million to GBP475 million.

Revenue rose 3.6% to GBP5.78 billion from GBP5.57 billion on-year, or by 3.4% at constant currency, driven by total value and volume growth in both B&M businesses and partially offset by a 0.3% revenue decline at Heron Foods.

B&M UK total sales grew 2.9%, with like-for-like sales down 0.1%. There was a positive value and volume LFL performance in General Merchandise, offset by a narrowing decline in fast moving consumer goods LFL sales. Market consensus had predicted a 0.4% decline.

In response to the expectations beat, shares in B&M soared 15% to 195.36 pence each in London on Wednesday morning, the best performing stock in the FTSE 250 index, which was down 0.3%.

In the fourth quarter of the financial year, B&M UK LFL sales grew 0.1% compared to an overall decline of 0.4% in the second half, reflecting continued FMCG improvement.

B&M France total sales increased 13%, driven by 2.9% LFL sales growth, higher transaction volumes, and 12 new store openings.

Chief Executive Tjeerd Jegen said it was a "difficult" year that saw profits fall due to a "challenging market and execution issues".

"We launched our 'back to B&M basics' plan in October to restore like-for-like sales growth at B&M UK, which was flat overall versus FY25 while showing sequential improvement. The past six months has seen us sharpen our pricing, improve on-shelf availability in best-selling brands and revamp our in-store promotions," he added.

Free cash flow improved by 3.0% to GBP321 million from GBP311 million, reflecting working capital inflows as inventory reduced through accelerated clearance activity, and net debt fell by 16% to GBP656 million from GBP781 million.

Even so, B&M slashed its total annual dividend by 36% to 9.6 pence from 15.0p. This included a final dividend of 6.1p.

B&M said the re-domicile of the group from Luxembourg to Jersey completed in February will enable greater flexibility in returning capital to shareholders, including share buybacks when excess cash is available.

CEO Jegen said financial 2027 remains a "year of investment" as "we work hard to deliver growth under 'back to B&M basics' and balance new store growth with investing in our store formats."

He said the firm is confident it can offset rising energy costs in the year ahead through cost mitigation, the benefits of which will flow through to the bottom line once B&M UK returns to LFL sales growth.

"In the medium term, we continue to see no reason why B&M UK cannot return to double-digit Ebitda margins," he said. Ebitda margin in the financial year just ended fell to 8.0% from 11.1% the year prior.

B&M said its UK business has seen a slower start to the garden season compared to last year which was boosted by early warm weather, but May has seen a recovery as the weather improved.

B&M France has made a good start to financial 2027, with higher footfall and market share driving positive LFLs. Heron LFL sales have made a positive start to the year, B&M said.

For financial 2027, B&M intends to use adjusted pretax profit for financial guidance, rather than adjusted Ebitda, in line with UK industry peers. B&M will provide full-year guidance with its interim results, in line with its usual policy.

In financial 2026, adjusted pretax profit dropped 38% to GBP284 million from GBP455 million.

"B&M is facing a much tougher trading environment as major supermarkets step up loyalty programmes and discounting," comments Orwa Mohamad, an analyst at Third Bridge. "Retailers such as Tesco and Sainsbury's are investing heavily to stop customers moving to value chains, which is weakening the perception that B&M still offers significantly better value."

The analyst added: "Our experts say B&M may be approaching saturation in parts of the UK, particularly in retail parks where the company already has a large presence. Opening too many new stores risks cannibalising existing locations and making it harder to maintain like-for-like growth once the initial honeymoon period fades."

By Jeremy Cutler, Alliance News reporter

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