B&M backs FY guidance, declares special dividend as Q3 sales rise 5%

(Sharecast News) - B&M European Value Retail reiterated its full-year guidance on Tuesday and declared a special dividend, as it posted a jump in third-quarter sales. The discount retailer said it still expects group adjusted EBITDA of between £620m and £630m for FY24, up from £573m a year earlier.

In an update for the 13 weeks to 23 December, the company said group revenues jumped 5% to £1.65bn. This was a slowdown from the 6.2% growth seen in the first half, however. Year-to-date growth was 8.1% to £4.2bn on a constant currency basis.

It also said that the board will be declaring a special dividend of 20p per ordinary share to be paid on 9 February.

Chief executive Alex Russo said: "The performance across the Golden Quarter has been pleasing, with strong operational execution across the three businesses. Our strategy remains unchanged - we are an everyday low-price discounter with a laser-focus in keeping excellence in retail standards and our costs the lowest. This allows us to provide our products at the best price to all customers - many of whom continue to face significant cost-of-living pressures."

He added that the store pipeline is strong and the retailer we will open at least 45 B&M UK stores in each of the next two financial years, "driving disciplined cash generating growth".

At 0925 GMT, the shares were down 0.8% at 557.20p, off earlier lows.

Victoria Scholar, head of investment at Interactive Investor, said, the slowdown in sales growth "has sparked nervousness among investors about a broader slowdown in retail demand amid the weak consumer backdrop".

She added: "Discounted retailers such as B&M have largely benefitted from the cost-of-living crisis as increasingly price sensitive consumers trade down to cheaper stores, boosting sales of its vast array of cut-price items. But with concerns about higher interest rates and the risk of a UK recession, the consumer strain may be starting to have a broader impact, affecting retailers even at the value end of the spectrum.

"While the Golden Quarter is typically the strongest, most significant period for retail, the post-Christmas lull and the confluence of macroeconomic pressures this January and February are likely to be quite painful.

"Amid the sales slowdown, investors are struggling to get excited by today's update with shares in B&M under pressure, languishing near the bottom of the FTSE 100. Despite this, shares have still had a strong run over the past 12 months, with a market cap increase of almost a quarter."