B&M shares jump 15% as profit beats lowered market forecasts

B&M European Value Retail PLC reported adjusted EBITDA of GBP459 million for the financial year ended March 28, beating the GBP450 million Visible Alpha consensus and landing within the midpoint of the company's lowered guidance range of GBP440 million to GBP475 million.

"The past six months has seen us sharpen our pricing, improve on-shelf availability in best-selling brands and revamp our in-store promotions," Chief Executive Tjeerd Jegen said.

Revenue rose 3.6% to GBP5.78 billion from GBP5.57 billion, driven by total value and volume growth in both the UK and French businesses. B&M UK total sales grew 2.9%, with like-for-like sales down 0.1% — better than the 0.4% decline analysts had expected. B&M France posted total sales growth of 13%, supported by 2.9% like-for-like growth and 12 new store openings.

Pretax profit fell 47% to GBP227 million from GBP431 million, while adjusted EBITDA margin contracted to 8.0% from 11.1% a year earlier. The company cut its total dividend by 36% to 9.6 pence per share from 15.0 pence. Net debt declined 16% to GBP656 million from GBP781 million, and free cash flow improved 3.0% to GBP321 million.

Jegen described the year as "difficult," citing a challenging market and execution issues that prompted the "back to B&M basics" turnaround plan launched in October. The plan focuses on sharper pricing, improved on-shelf availability and revamped in-store promotions.

B&M faces intensifying competition from major UK supermarkets. "Retailers such as Tesco and Sainsbury's are investing heavily to stop customers moving to value chains, which is weakening the perception that B&M still offers significantly better value," Orwa Mohamad, an analyst at Third Bridge, said.

The company warned of upward cost pressures from the Middle East conflict and noted a slow start to the key garden season, though May saw a recovery as weather improved. B&M said it can offset rising energy costs through mitigation measures, with benefits flowing through once UK like-for-like sales return to growth.

For financial 2027, Jegen said it remains a "year of investment" as the company balances new store growth with investments in store formats. In the medium term, management sees no reason why B&M UK cannot return to double-digit EBITDA margins.

Shares rose 15% to 195.36 pence in London trading, making B&M the best-performing stock on the FTSE 250 index. The guidance signals management expects the turnaround plan to gradually restore profitability. Investors will watch interim results for evidence that UK like-for-like sales have turned positive.

This article is for informational purposes only and does not constitute investment advice.