B&M European Value Retail SA (LSE:BME) festive trading update was much weaker than expected, Deutsche Bank said, but the past quarter could represent the "trough" before a potential rebound.
Group sales growth of 2.6% for the third quarter was around a 4% miss versus the consensus forecast, the bank noted.
B&M also announced a special dividend of 15p a share.
But this did not obscure the most important element, said analyst Adam Cochrane, was that UK like-for-like sales fell 2.8%, "materially below" expectations as he had forecast a 0.5% decline and the City consensus was looking for a 0.5% rise.
This was a sequential deceleration from a 1.9% decline in Q2 despite an easier comparison in the third quarter the year before.
"The main issue for B&M has been a negative UK LFL, although management has reiterated the focus on investing in pricing to drive volume-led growth with an estimated circa three percentage point gap between value and volume, and although 3Q was weak the exit run rate is better and may suggest 3Q is the trough."
He said the share weakness today was based on the lack of UK LFL progress, outweighing the announcement of an "already expected" special dividend.
Jonathan Pritchard at Peel Hunt said the update was notable on three fronts: the declining LFL number, reflecting deflation but positive sales volumes and with December positive at a headline LFL level.
Profit-wise, the range was previously EBITDA of £620-660 million but has fallen slightly to £620-650 million.
On the special dividend, he said: "In time we expect that this will evolve into a combined share buyback/special distribution, but either way, the 15p special is the equivalent of 4% of the share price."
While Pritchard said he expected consensus forecasts for this year will remain unchanged, given the cautious rhetoric for 2025 from "pretty much everybody retail-minded, it may be that the top of the range comes back towards consensus for FY26.
"However, in light of how far the shares have fallen, we reiterate our Buy rating."