B&M European Value Retail SA (LSE:BME) shares fell after the discount retailer reported a decline in underlying UK sales, although analysts said the update was largely in line with expectations and did little to alter the investment case.
Shares in the FTSE 250-listed group fell 5.8% to 192.1p by early afternoon on Wednesday.
This followed the release of a trading update showing UK like-for-like sales falling 2.3% in the first quarter as a weaker start to the garden season weighed on demand.
However, sales improved through May and June as warmer weather returned, while sales in France and at under its Heron Foods banner both delivered stronger-than-expected growth.
The market reaction contrasted with analysts' assessments of the update.
Jefferies said the trading performance was "very much as expected" after management warned at June's annual results that the quarter would be affected by tough comparisons with last year's unusually strong spring weather.
"Demonstrating this, general merchandise returned to growth in May and June, and inventory ended the period at normalised levels."
Jefferies also noted a small improvement in the two-year LFL run-rate, although this was complicated by Easter timings.
The figures gave "little... to suggest any change to consensus forecasts", the broker added.
Peel Hunt also described the quarter as being "on track", noting that general merchandise sales returned to year-on-year growth in May and June and seasonal inventory ended the period at normal levels.
The broker added that B&M had entered the second quarter with "less seasonal volatility and a more stable base".
Management also reiterated its confidence that investments under its "Back to B&M Basics" turnaround programme would help rebuild group profitability over time, although it stopped short of upgrading guidance.
Peel Hunt's conclusion was that it was a "solid first quarter, with performance in keeping with our forecasts, and the wider market, and we expect consensus is likely to be largely unchanged following today’s update".
Seeing "significant recovery potential", the broker reiterated its 'buy' stance. Jefferies remained at 'hold', with a 180p price target that implies downside to the current trading levels.
