Discount retailer B&M hikes earnings outlook and declares £200m special dividend
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Discount retailer B&M raises earnings outlook and announces £200m special dividend after strong end to 2022
- B&M revealed third-quarter sales increased 12.3% to £1.57 billion
- It now expects to achieve core income of £560m to £580m this financial year
- Shareholders will receive a dividend of 20 pence per share early next month
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B&M European Value Retail has raised its annual profit forecast and announced a special dividend after a robust Christmas season.
The supermarket chain revealed that sales grew 12.3 percent to £1.57 billion in the three months ending Christmas Eve, compared to the same period last year, thanks to solid performance across all divisions.
Within the group’s French operations, sales rose by a quarter to £136 million, while frozen food chain Heron Foods saw sales grow by 22.5 percent.
Bargain shop: B&M sells a wide range of discounted goods, ranging from garden tools to furniture, clothing and electrical appliances, in over 1100 stores in the UK and France
Meanwhile, UK sales rose 10.3 per cent to £1.3 billion on the back of significant demand for groceries and general merchandise as more Britons looked for bargains amid a worsening cost of living crisis.
B&M added that “excellent” sell-through in certain ranges from the latter category helped boost gross margins, which have been impacted over the past year by price cuts on garden products to eliminate excess inventory.
The FTSE 100 retailer now expects an adjusted core profit of between £560m and £580m this financial year, compared to current analyst estimates of £557m.
It also plans to pay shareholders a dividend of 20p per share early next month, representing a total value of around £200m.
Chief executive Alex Russo praised the company’s healthy performance during the “Golden Quarter,” which he said “reflected the strength of our unchanged strategy to relentlessly focus on price, product and excellence in retail execution.”
He added that even in the context of tougher economic conditions, B&M will “continue to work hard to help both existing and new customers manage the cost of living crisis.”
Headquartered in Liverpool, B&M sells a wide range of discounted goods, ranging from garden tools to furniture, clothing and electrical appliances, in more than 1,100 stores across the UK and France.
Sales boomed in the first year of the Covid-19 pandemic, skyrocketing by £1bn as UK outlets benefited from staying open throughout the period and high demand for DIY self-products.
Trading has slowed significantly since lockdown restrictions eased, but analysts have predicted that the current inflationary backdrop could encourage more shoppers to shop for a good deal at one of the company’s stores.
Russ Mould, director of investment at AJ Bell, said: ‘B&M is appealing to people who want to trade in to higher-end retailers, demonstrating that the value proposition is a winning model from a price perspective in the current environment.
“Importantly, there’s talk of improved gross margins and more efficient supply chains, two areas that have been problematic for the retail industry over the past year.”
B&M European Value Retail shares were 0.7 percent higher at 448.4 pence late Thursday afternoon, though their value is down 29 percent over the past 12 months.