B&M European Value Retail SA (LSE:BME) slumped over 9% on Monday after a profit warning and the announcement that chief executive Alex Russo is leaving after two and a half years in charge.
Tough trading, economic uncertainty and exchange rate volatility were blamed for the earnings downgrade and as this was flagged at the same time as news of Russo’s departure, analysts at Panmure Liberum said the two were unlikely “mutually exclusive events”.
B&M’s performance had been disappointing for the past year, the analysts said, cutting their share price target cut from 630p to 600p but keeping a ‘buy’ rating in place.
Analysts at Peel Hunt added that the retirement of Russo, who was promoted from CFO in 2022, would leave a “significant gap” at the retailer, as he has been “instrumental in significantly upgrading store standards”.
The broker, which also held onto its ‘buy’ rating and 600p share price target, said it liked the shares due to their “lowly” valuation and “faith in the quality and growth potential of the business”.
Shore Capital analysts, citing a 5.5x price/earnings ratio and 0.5x enterprise value to sales, said B&M’s downtrodden valuation reflected a lack of confidence currently.
“With the grocery market remaining highly price competitive we expect it to remain a challenging market for B&M to maintain its price differential while returning to like for like growth.”
Sinking below 260p on Monday, the shares were at their lowest since March 2020, excluding that pandemic effect it would be an eight-year low.