B&M European Value Retail (BME) reported a steep fall in annual profit on Wednesday, after a year shaped by weaker earnings, execution challenges and shifting consumer conditions, although signs of stabilisation in UK trading helped lift investor sentiment sharply at the start of the new financial year.
Pretax profit dropped 47% to £227 million for the year to 28 March, down from £431 million previously, while adjusted EBITDA fell 26% to £459 million, coming in ahead of expectations and within the company’s revised guidance range.
Revenue still edged higher by 3.6% to £5.78 billion, supported by volume and value growth across the core business and stronger performance in France, even as Heron Foods saw a slight decline in sales.
UK trading remained mixed but showed improvement in momentum with total UK sales rising 2.9% while like for like sales slipped just 0.1%, a smaller decline than analysts had forecast.
General Merchandise delivered positive like for like growth, helped by value focused demand, while fast moving consumer goods continued to lag but at a reduced rate of decline. The final quarter brought a return to marginal growth, suggesting some stabilisation after a softer second half.
Performance in France provided a clearer source of strength. Sales increased 13% with like for like growth of 2.9%, supported by higher customer volumes and the opening of 12 new stores.
The contrast between the two markets highlights the uneven nature of recent trading, with UK competition intensifying as supermarkets sharpen discounting strategies, including moves from Tesco and Sainsbury’s to defend value perceptions.
Chief executive Tjeerd Jegen described the period as difficult, pointing to both market pressure and internal execution issues, while outlining the group’s “back to B&M basics” plan aimed at restoring like for like growth through tighter pricing, improved availability and more focused in store promotions. Early progress has been seen in stabilising UK sales trends, although the company acknowledged that conditions remain competitive.
Free cash flow rose to £321 million as inventory reductions released working capital, while net debt fell 16% to £656 million. However, shareholders will see a reduced return, with the total dividend cut 36% to 9.6 pence, reflecting the weaker profit base.
Despite the earnings decline, markets reacted positively to the update, with shares rising 15% as investors focused on the earnings beat and early signs of operational improvement.
The company also reiterated medium term ambitions, including a potential return to double digit EBITDA margins in the UK, which fell to 8% from 11.1% a year earlier.
Looking ahead, the company signalled FY27 will remain an investment year as it balances store expansion with format upgrades and cost control.
Early trading in France has started strongly, while UK garden season sales have been slower after last year’s weather driven boost, although momentum improved in May as conditions turned more favourable.