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(Sharecast News) - Canaccord Genuity has reiterated its 'buy' rating for B&M European Value Retail, saying it was encouraging by this week's annual results which showed the discount retailer's turnaround plan was "gaining traction".
"FY26 was a challenging year for B&M with flat UK LFLs, and margin pressure from price investment and cost inflation, resulting in a sharp decline in profitability despite continued space-led topline growth," Canaccord Genuity said in a research note on Friday.
While group revenues were up 3.6% at £5.78bn over the year to 28 March, annual pre-tax profits were down 38% at £284m, partly due to increases to the minimum wage, higher employer National Insurance contributions and the recycling levy alongside growth in the retail estate.
However, the broker pointed out that the business finished the year "on a firmer footing, supported by the early benefits from the 'Back to B&M Basics' strategy".
"The execution of the Back to B&M Basics plan is on track with strategic progress being made across pricing, promotions, ranging and availability. The group has sharpened price competitiveness, simplified ranges through SKU reductions and improved on-shelf availability (rising from 86% to 93%), while clearing legacy inventory and refocusing the offer," it said.
The stock currently trades at a price-to-earnings ratio of 9.1 based on 2027 calendar year estimates, which Canaccord Genuity said "offers good value", given its long-term average PER multiple is around 15x.
The broker kept a 230p target price for the stock, which was up 1.4% at 211.16p by 1451 BST.
