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B&M store growth distracts from the threat of big discounters

New stores boosted the discount retailer's sales and profits, but like-for-like figures were less impressive

B&M European Value Retail 's (BME) mission to deliver explosive earnings and revenue growth by rapidly expanding its store estate has gained further traction. The opening of a record 79 new discount outlets during the reported period, coupled with increased buying power and a larger proportion of high-margin non-grocery product sales, triggered a 16 per rise in adjusted cash profits to £203m.

IC TIP: Hold at 291p

Investors responded to this success, and the surprising payment of a £100m special dividend after a year of significant investment, by sending the shares up more than 3 per cent. But, despite the clear optimism surrounding B&M's prospects and impressive cash generation, stagnant sales growth from existing stores indicates that the business model isn't without problems.

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