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B&M European Value Q3 sales miss expectations
10th Jan 2020 07:34
(Sharecast News) - B&M European Value Retail was under the cosh on Friday as it reported slower-than-expected third-quarter sales against a "challenging backdrop".
In an update for the 13 weeks to 28 December, the retailer said group revenue grew 9.3% at constant currency to £1.19bn, with UK stores revenue growth of 8.8% and UK stores like-for-like sales growth of 0.3%. Analysts had been expecting UK LFL store growth of 2.5%.
B&M attributed the weaker-than-expected performance to a "challenging" broader retail market and its decision not to engage in any early discounting.
Revenues at its French business, Babou, increased 29.3% on a constant currency basis, while revenues at German business Jawoll - for which it is currently carrying out a strategic review - declined 1.5%.
B&M said it had seen a "positive" start to January trading. However, it cautioned that the outlook for the rest of the quarter could be impacted by adverse weather.
Chief executive Simon Arora said: "Against the backdrop of a difficult UK retail environment with reduced shopper footfall and political uncertainty, our core B&M UK business generated continued growth and delivered a record level of peak season sales.
"Cumulatively, B&M UK has achieved +2.3% LFL sales growth during the financial year to date, albeit with a slower performance than anticipated during the run up to Christmas.
"Overall the business delivered a good quarter operationally. Costs were well controlled and, combined with our usual strong focus on cash gross margins, yielded a profitable outcome. We were also able to exit the period with normal seasonal inventory levels. Our new store programme delivered 15 gross and 12 net new B&M UK stores in the quarter, and this year's openings as a whole have performed better than expectations."
At 0900 GMT, the shares were down 9.2% at 360.70p.
RBC Capital Markets said: "B&M is a space driven model but the market is likely to be concerned about the LFL run rate, particularly as comparisons become tougher in Q4."
In an update for the 13 weeks to 28 December, the retailer said group revenue grew 9.3% at constant currency to £1.19bn, with UK stores revenue growth of 8.8% and UK stores like-for-like sales growth of 0.3%. Analysts had been expecting UK LFL store growth of 2.5%.
B&M attributed the weaker-than-expected performance to a "challenging" broader retail market and its decision not to engage in any early discounting.
Revenues at its French business, Babou, increased 29.3% on a constant currency basis, while revenues at German business Jawoll - for which it is currently carrying out a strategic review - declined 1.5%.
B&M said it had seen a "positive" start to January trading. However, it cautioned that the outlook for the rest of the quarter could be impacted by adverse weather.
Chief executive Simon Arora said: "Against the backdrop of a difficult UK retail environment with reduced shopper footfall and political uncertainty, our core B&M UK business generated continued growth and delivered a record level of peak season sales.
"Cumulatively, B&M UK has achieved +2.3% LFL sales growth during the financial year to date, albeit with a slower performance than anticipated during the run up to Christmas.
"Overall the business delivered a good quarter operationally. Costs were well controlled and, combined with our usual strong focus on cash gross margins, yielded a profitable outcome. We were also able to exit the period with normal seasonal inventory levels. Our new store programme delivered 15 gross and 12 net new B&M UK stores in the quarter, and this year's openings as a whole have performed better than expectations."
At 0900 GMT, the shares were down 9.2% at 360.70p.
RBC Capital Markets said: "B&M is a space driven model but the market is likely to be concerned about the LFL run rate, particularly as comparisons become tougher in Q4."