B&M European swings to interim profit as new stores boost revenue

In the 26 weeks to 26 September, the FTSE 250 group posted a pre-tax profit of £66.7m compared with a £16.5m loss in the corresponding period in 2014, when it was hit by higher, non-recurring, financial costs.

Revenue rose 25.7% year-on-year to £930.3m, boosted by a number of new store openings, the group said. In the first six months of the year 47 net new stores opened their doors in the UK, bringing the total number of stores to 472.

By comparison, in the first half of 2014 the company had opened only 20 shops, while it is now on track to open 80 net new stores in the full year.

However, the group indicated the "greater-than-budgeted" store opening level and the opening of two new distribution centres in Britain have resulted in short-term operational challenges weighed on like-for-like sales, which grew 1.2% in the period.

“The news that like-for-like sales growth was only 1.2% in the first half, because of 1.3% cannibalisation by new stores, will also raise eyebrows, although it is reassuring to hear that overall earnings growth and return on investment remains strong and that the push into Germany is going well,” said retailing analyst Nick Bubb.

However, despite the marginal growth in like-for-like sales, the group remained upbeat over its outlook for the Christmas period.

"The unusually mild temperatures have led to a slow start for cold weather and seasonal ranges but we are well prepared for Christmas trading,” said group chief executive Simon Arora.

“We are confident both in the full year outlook and in the longer term potential for our unique retail model as we continue the roll out of our store estates in the UK and Germany.”

B&M shares were down 4.16% to 306.30p at 0853 GMT on Tuesday.