Analysts struck a cautious but mildly constructive tone on B&M European Value Retail SA (LSE:BME) following its interim results, which confirmed a sharp year-on-year drop in profit but few surprises after two earlier pre-releases.
The discount retailer posted first-half EBITDA of £191 million, down 30% year on year, on sales of £2.75 billion, up 4%.
Earnings per share fell 48% to 7.2p, with a dividend of 3.5p. The UK business reported flat like-for-like sales and a 29% fall in EBITDA, while France performed strongly with a 13% sales rise.
The company maintained its long-term target for 1,200 stores.
Peel Hunt said the results were “mildly reassuring”, noting that the new chief executive has reshaped senior management, hiring Simon Hathway as trading director from 3i Group-owned Action and aligning retail with supply chain operations.
On current trading, the broker assumes LFL sales down around 2%, at the bottom end of the range.
"But there is plenty more time left in the golden quarter: if -2% persisted, then a bottom-of-the-range outcome would likely ensue."
"Given how weak the shares have been, we find today's announcement mildly reassuring and stick with our Add recommendation."
Deutsche Bank’s Adam Cochrane said B&M is “in a tough spot”, with its value-focused shoppers under pressure and the turnaround still in early stages.
However, he maintained a 'buy' rating but trimmed his price target to 235p from 250p.
He cited the retailer’s strong cash generation and 13% free cash flow yield, saying initiatives outlined by management "should build over the period".
Shares were little moved at 164.55p on Thursday, after falling 54% in the year to date.