High street discounter B&M European Value underlined its existing profit guidance for 2023 and its expansion plans for this year, after sales rose in the peak Christmas shopping season.
But the 5% rise across the group in what retailers call the “golden quarter” was lower than the 6.2% growth in the first half of the year. Shares in the FTSE 100 company slipped, by 0.8% to 557p, coming off a strong run into the closely watched trading update.
Like-for-like sales, from shops open for at least a year, rose 1.2% in what B&M said was “a strong quarter given prior year comparatives.”
B&M’s discount chain is a bellwether for retail sales, with over 700 stores serving 4 million customer a week and employing 35,000 people. It said it was "on track" to open 76 new stores, including 11 in France, with at least 45 new UK outlets due this year. One is due to open in Harrow next month.
It announced a payday for investors via a special 20p per share dividend and left its annual profit guidance unchanged, at between £620 million and £630 million, having made £573 million last year.
The Liverpool-based company has looked well-placed for the cost-of-living crisis, with a strong reputation for good value attracting budget conscious shoppers from more expensive rivals.
Victoria Scholar, head of investment at Interactive Investor, said B&M’s update “has sparked nervousness among investors about a broader slowdown in retail demand amid the weak consumer backdrop,” adding:
“With concerns about higher interest rates and the risk of a UK recession, the consumer strain may be starting to have a broader impact, affecting retailers even at the value end of the spectrum.”
Alex Russo, B&M’s chief executive, said "The performance across the golden quarter has been pleasing … Our strategy remains unchanged - we are an everyday low-price discounter with a laser-focus in keeping excellence in retail standards and our costs the lowest.
“This allows us to provide our products at the best price to all customers - many of whom continue to face significant cost-of-living pressures.”
In the latest sign of the importance of discounting this Christmas, B&M said its general merchandise volume was "excellent" and "delivered strong sales participation and high sell-through."
Russ Mould, investment director at AJ Bell, said: "The best way to sum up B&M’s latest trading update is ‘fine but not fantastic’. It means the retailer will have to try harder to get the tills ringing faster in 2024.”
