B&M backs FY earnings guidance as interim sales rise, profits dip
B&M European Value Retail
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Discount retailer B&M European Value Retail reiterated its earnings guidance for the year on Thursday as it posted a rise in interim revenues but a drop in profit.
In the 26 weeks to 24 September, group revenues increased 1.8% from the same period a year earlier to £2.3bn. B&M said this represents a step-up in second-quarter sales, which rose by 6.2%, compared to a 2.3% decline in the first quarter.
Group adjusted earnings before interest, tax, depreciation and amortisation fell 17.9% to £232m, coming in below consensus expectations of £243m. Pre-tax profit declined to £201m from £241m.
In the UK, adjusted EBITDA declined 10.6%, as the trading gross margin was hit by higher markdowns in the gardening category due to the late arrival of warm weather.
B&M said it still expects full year group adjusted EBITDA of between £550m and £600m, in line with previous guidance.
Chief executive Alex Russo said: "Sales momentum is good as we enter a difficult period for the economy and consumers. Our value-based approach is winning with existing and new customers, and we will do our very best to help them weather the cost-of-living crisis.
"We are well positioned as we trade through the Golden Quarter and our strategy remains unchanged - a relentless focus on price and product."
B&M said it was trading "well" into the first six weeks of the Golden Quarter, with like-for-like sales at the UK business up 2.5%. This represents a significant increase in total sales over pre-Covid levels, and is against a backdrop of rising interest rates, increased cost inflation and declining consumer confidence, it noted.
"We expect our gross margin to improve going forwards compared to H1, helped by strong stock discipline, and not impacted by disappointing weather patterns as at the beginning of Spring/Summer 2022."