Shares in B&M European Value Retail SA (LSE:BME) jumped over 16% after the discount retailer reported a smaller fall in annual profits than analysts were expecting and signs of progress from its turnaround plan.
For the year to March 2026, weak trading in the UK and "execution issues" led to the FTSE 250 group posting an adjusted profit before tax of £284 million, down 38% from a year earlier.
Adjusted EBITDA fell 26% to £459 million, which was above the average analyst forecast of £451 million.
Revenue increased 3.6% to £5.8 billion, supported by 64 new store openings and a strong performance in France, where sales rose 13.4%.
Like-for-like sales at B&M UK declined 0.1% over the year, although fourth-quarter like-for-like sales returned to marginal growth.
Chief executive Tjeerd Jegen said it was "a difficult year that saw profits fall due to a challenging market and execution issues."
The Dutchman, who joined as chief executive in June last year, said early results from a back-to-basics programme had been "encouraging", with improved price competitiveness, stronger promotional activity, better stock availability and successful trials of reduced product ranges paving the way for a wider simplification of its grocery offer.
Cash generation remained strong, with post-tax free cash flow rising to £321 million from £311 million, while net debt fell 16% to £656 million.
A final dividend of 6.1p per share has been proposed, taking the total ordinary dividend for the year to 9.6p, down from 15p the year before.
Looking ahead, B&M said the 2027 financial year would be a year of investment as it continues its turnaround efforts.
A slow start to the 'garden season' was reported but trading improved during late May as warmer weather boosted demand for seasonal products.
Shares rose 16.1% to 198p in early trading on Wednesday.
Peel Hunt analysts said EBITDA beat expectations thanks to flat LFL sales in the core business in the fourth quarter, which was "a pleasing outcome and suggests management is getting to grips with the problems".
The current trading statement is "vague but points to positive LFL sales in France and Heron, which is pleasing", after the UK arm seemed to have a tough April and early May before improving weather supported a better recent trend.
The broker said it expects UK LFL sales to be "slightly negative" for the first quarter.
** UPDATE: Adds share price and broker comment **
