B&M Value lifts profit outlook as bargain hunters boost Q3 sales

Discount retailer B&M upgraded profit expectations and said it would pay a special dividend after a 12.3% rise in group third quarter revenue driven by bargain hunting shoppers during the Christmas period.

The retailer, with operations in the UK and France, said it now expected annual adjusted core earnings to be in the range of £560m-580m, ahead of current analysts' consensus estimates of £557m. The board intends to declare a special dividend of 20p a share.

B&M, which sells a wide range of products including homewares, toys and food, said group sales rose to £1.56bn as consumers looked for cheaper options amid the cost-of-living crisis. UK like-for-like revenue rose 6.4% in the three months to December 24.

The company hailed a “very good performance” across all its UK sales categories, in grocery and general merchandise, with “excellent sell-through in key general merchandise ranges supporting improved gross margin performance”.

"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," said chief executive Alex Russo.

"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."

AJ Bell investment director Russ Mould said the company "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.

Reporting by Frank Prenesti for Sharecast.com