B&M European Value Retail (BME) has been building out its store estate rapidly, but at the expense of organic growth. The discounter reported like-for-like sales growth of 1.2 per cent for the half-year to 26 September. But its organic growth rate would have been double that, according to management, had some of its new stores not cannibalised the sales of existing outlets. In the UK, the company opened 47 net new stores in the period to bring the total to 472 - a record pace of expansion.
The launch of two new distribution centres, one in June and the other in September, also caused some operational hiccups. Management noted "below-normal service levels to stores" in the run-up to the crucial Christmas trading period, as well as a "slow start for cold weather and seasonal ranges" as a result of the recent mild temperatures. The impression is that organic growth has remained weak in the second half so far, although the company published no trading figures for the six weeks since September.
There were early signs of progress in Germany, where B&M's Jawoll business is trialling new store formats in a market it says is "under-served" by general merchandise discount retailers. Cash profits there grew by 7 per cent, in line with expectations.
Brokerage Numis expects pre-tax profit of £165m for the year ending March 2016, giving EPS of 12.5p, compared with £135m and 10.3p in FY2015.
B&M EUROPEAN VALUE RETAIL (BME) | ||||
|---|---|---|---|---|
| ORD PRICE: | 308p | MARKET VALUE: | £3.08bn | |
| TOUCH: | 308-308.3p | 12-MONTH HIGH: | 361p | LOW: 253p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 28 | |
| NET ASSET VALUE: | * | NET DEBT: | £402m | |
| Half-year to 26 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 740 | 41.8 | -2.1 | 0.9 |
| 2015 | 930 | 77.8 | 5.2 | 1.6 |
| % change | +26 | +86 | +348 | +78 |
Ex-div: 3 Dec Payment: 15 Jan *Negative shareholders' funds | ||||
