In Brief:
- B&M cuts FY26 EBITDA guidance to £440–475 million, citing pricing and clearance investments impacting profits
- Third-quarter revenue rose 2.9%, driven by France, while UK and Heron Foods showed weaker like-for-like sales
- Accounting corrections and Heron underperformance add pressure despite long-term strategy to strengthen the value proposition
B&M European Value Retail (LON:BME) on Thursday lowered its full-year outlook, citing investments in pricing and clearance that aim to strengthen the business long-term but weigh on near-term performance.
Chief Executive Officer Tjeerd Jegen said the firm has sought to reinforce its value proposition for customers during the third quarter to December 27, which included the crucial Christmas trading period.
“Price investment has continued, particularly in fast-moving consumer goods, and while the full benefits will take time, early signs of like-for-like sales growth at B&M UK are encouraging,” Jegen said.
Third-quarter group revenue rose 2.9% to £1.74 billion, with UK growth of 1.9%, France up 8.5%, and Heron Foods rising 1.4%. Like-for-like sales were down 0.6% in the UK and 0.1% at Heron Foods, while France grew 0.4%.
B&M is also increasing clearance activity as part of a range rationalisation programme, with the aim of removing discontinued and seasonal lines. Jegen said these steps, alongside pricing investments, will benefit the firm over the long term but impact near-term earnings.
As a result, full-year adjusted EBITDA guidance has been lowered to £440 million–£475 million, down from £470 million–£520 million. Financial 2025 adjusted EBITDA stood at £620 million.
The outlook revision also reflects the underperformance of Heron Foods. Jegen noted the business is reviewing its customer proposition and operational adjustments to address results below expectations.
The firm previously faced accounting issues related to overseas freight costs, which were corrected and reviewed by EY. CFO Helen Cowing was appointed interim last November following the departure of Mike Schmidt.
B&M shares initially rose 2% on Thursday but later gave back gains. Analysts maintain a generally positive view, with six buy ratings, one hold, and one sell, and an average 12-month price target of 221.63p.