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UK still slow for B&M

The discount retailer has seen growth stutter in its largest market
May 27, 2019

B&M European Value Retail (BME) announced like-for-like sales growth in the UK store estate of just 0.7 per cent for FY2019, far short of the 4.7 per cent seen in the prior year. Problems were foreshadowed at the half-year mark, with management blaming a disappointing performance in its key homewares segment, while insisting that it continues to see solid demand for groceries and fast moving consumer goods.

IC TIP: Hold at 360p

Like-for-like sales growth mightn't have set pulses running, but the bargain retailer did deliver a 160 basis point increase in the gross margin, while UK B&M store fascia increased cash profit by 13.5 per cent to £297m. Statutory earnings were held in check by a double-digit increase in admin costs, partly linked to 44 net store openings in the UK through the period. Further afield, product changes led to a steep drop in margins and related profits for Jawoll, B&M’s German business, as it cleared old stock to make room for new products sourced through the broader group’s supply chain.

Broker Numis expects adjusted EPS of 20.9p in the March 2020 year-end, up from 19.7p in 2019.

B&M EUROPEAN VALUE RETAIL (BME) 
ORD PRICE:359.8pMARKET VALUE:£3.6bn
TOUCH:359.7-360p12-MONTH HIGH:436pLOW: 278p
DIVIDEND YIELD:2.1%PE RATIO:18
NET ASSET VALUE:107p*NET DEBT:58%
Year to 31 MarTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20151.6561.73.43.4
20162.0415512.54.8
20172.4318314.35.8
20183.0322918.67.2
2019**3.4924920.57.6
% change+15+9+10+6
Ex-div:20 Jun   
Payment:2 Aug   
*Includes intangible assets of £1.08bn, or 108p per share, **Year to 30 Mar