FTSE 250 movers: B&M surges; GB Group slides again

(Sharecast News) - FTSE 250 (MCX) 23,188.28 -0.81%

Shares in B&M European Value Retail surged on Wednesday, after the retailer posted a smaller-than-expected slide in annual profits, despite being hit hard by weaker sales in the UK and soaring costs.

Group revenues at the discount retailer improved 3.6% in the year to 28 March, at £5.78bn, supported by a 2.9% uplift in like-for-like sales in B&M France.

However, in the UK, like-for-like sales softened 0.1%, while Heron Foods saw revenues decline 0.3%.

Group operating costs also rose sharply, up 11.7% at £1.65bn. B&M said it had been hit by increases to the minimum wage, higher employer National Insurance contributions and the recycling levy alongside growth in the retail estate.

As a result, adjusted pre-tax profits fell 38% to £284m.

The slump was not, however, as steep as feared, with consensus closer to £274m, and by 1100 BST, the FTSE 250 stock had put on 16% at 197.6p.

Chief executive Tjeerd Jegen acknowledged it had been "a difficult year that saw profits fall due to a challenging market and execution issues".

But he struck a more optimistic tone looking forward: "The past six months have seen us sharpen our pricing, improve on-shelf availability in best-selling brands and revamp our in-store promotions. We cleared discontinued lines well in the fourth quarter, and are now embarking on a SKU (stock keeping units) count reductions across all our fast-moving consumer goods categories."

Jegen - who joined a year ago - is seeking to turn the business around after a difficult period and return the UK to like-for-like sales growth through the Back to B&M Basics strategy, which he launched in October.

Looking to the current trading, and B&M said that while the garden season had experienced a slower start year-on-year, warmer weather in late May had driven a recovery in sales of seasonal categories.

It also flagged upward pressures on international freight, fuel and energy costs due to war in the Middle East.

But Jegen insisted he was "confident that we have sufficient levers to offset this impact with cost mitigation. Over time, these benefits will flow through to our bottom line once we have returned B&M like-for-like sale to growth.

"In the medium term, we continue to see no reason why B&M UK cannot return to double-digit EBITDA margins."

The company also announced it would use adjusted pre-tax profit for guidance going forward rather than EBITDA, bringing it in line with UK industry peers.

GB Group shares fell again after tanking on Tuesday when the identity and location technology company said a one-off £6m investment in its GBG Go platform would hit margins next year, overshadowing higher underlying earnings and improving revenue momentum.

FTSE 250 - Risers

B&M European Value Retail (BME) 194.80p 14.19% SDCL Efficiency Income Trust (SEIT) 46.95p 2.95% Cranswick (CWK) 5,530.00p 2.40% Ithaca Energy (ITH) 235.80p 2.21% Harworth Group (HWG) 124.60p 2.13% Oxford Instruments (OXIG) 3,278.00p 1.73% Clarkson (CKN) 4,604.00p 1.50% Howden Joinery Group (HWDN) 765.50p 1.46% Drax Group (DRX) 801.00p 1.26% Pennon Group (PNN) 502.50p 1.23%

FTSE 250 - Fallers

Bridgepoint Group (Reg S) (BPT) 243.40p -8.63% GB Group (GBG) 193.00p -5.85% Ninety One (N91) 210.40p -5.40% Aston Martin Lagonda Global Holdings (AML) 43.40p -5.35% IP Group (IPO) 66.90p -5.10% Ibstock (IBST) 93.30p -4.44% WPP (WPP) 267.40p -4.13% Marshalls (MSLH) 135.50p -3.96% Abrdn (ABDN) 236.80p -3.89% Energean (ENOG) 748.50p -3.78%