B&M European Value Retail hikes expansion guidance after full-year results impress

28th May 2015 10:23

B&M European, the discount retailer chaired by ex-Tesco boss Terry Leahy, posted a strong debut full year result thanks to a strong UK performance and 52 new shop openings, with sales surging 30% to £1.65bn.UK sales growth of 20% included a like-for-like sales increase of 4.4%, with a 3.4% gain in the fourth quarter.Adjusted group earnings before interest, tax, depreciation and amortisation increased by 34% to £174m thanks to 40-basis-point expansion of UK gross margin that reflected enhanced group buying power.Adjusted pre-tax profits increased by 55.7% to £135.0m and adjusted diluted earnings per share up 49% to 10.3p.Jawoll, the German business acquired at the start of the year, contributed £11m of adjusted EBITDA at a healthy 9% margin.Chairman Leahy said: "It is pleasing to report to shareholders that in B&M's first year as a public company it has delivered strong increases in sales, profits and cash generation whilst pushing on with rapid store rollout and investing in new infrastructure to support continued growth." Current trading has been a bit mixed, with the ongoing competetive market and a cold May combining to lead to a "slow start" for B&M's outdoor ranges, while the gross margin is facing a "modest headwind" due to the strength of the US dollar.Nevertheless, chief executive Simon Aron also delivered a very bullish outlook statement ahead of a year when the company is now set to add a net 60 new stores, against previous guidance of 45."We look forward to the year ahead and the longer term with confidence. We have a strong, high returning business model, a clear and deliverable strategy for growth and an excellent, experienced team."B&M is right at the centre of one of the most appealing sweet spots in retailing today; a winning, value-led, low cost, focussed assortment aimed at customers who enjoy or who need a bargain."Despite the weather and currency headwinds, broker Numis maintained its full year expectations due to the raised guidance on UK store openings."The valuation is demanding but B&M is in our view a rare case within the sector where the earnings delivery will justify it."