B&M European Value Retail S.A. (LON:BME) has reported double-digit profit growth in its full-year results despite a drag on its fourth quarter by severe UK weather conditions in March.
The FTSE 250 retailer reported adjusted pre-tax profits of £221.5mln, up 16.5% on the previous year, while group revenues grew 22.4% to £2.97bn from £2.43bn the year before.
READ: Value retailer B&M reports solid Christmas trading, remains on track to meet full year expectations
The profit results came in above forecasts by analysts at Deutsche Bank, who had previously predicted an adjusted pre-tax profit of £215mln for the group.
In terms of like-for-like (LFL) sales, B&M saw revenue growth on 4.7% on an LFL basis for the year, while its UK store footprint increased substantially, jumping to 927 stores from 612 the previous year mainly due to its acquisition of Yorkshire chain Heron Foods in August.
The group increased its final dividend for the year to 4.8p per share, an increase of 23.1% on the previous year.
Despite the good full-year performance, the group acknowledged that the severe weather in March had affected its second half, and that: "Frustratingly, our 2018 Spring/Summer ranges have seen a slow start due to the exceptionally cold March weather."
In its outlook, B&M chief executive Simon Arora said: “In the current challenging and competitive environment there are of course uncertainties but there are also opportunities; some retailers are finding it more difficult to keep pace with a rapidly changing industry and are downsizing and some others are exiting the market altogether.
He added: “These moves provide opportunities for B&M to grow its share of the market in some key categories. They also encourage a continued flow of existing store assets onto the market, some of which offer further scope for us to expand into geographic areas where B&M is still under-represented. This constant flow of existing retail space onto the market is also maintaining downward pressure on retail rents, which is a helpful factor given that we operate a wholly leasehold store estate.”
Arora also said that the firm had seen UK LFL revenue growth of 3.1% in the first 8 weeks of its first quarter and remained confident of a solid outcome for the period.
In a note to clients, analysts at Liberum commented: "An expected slower Q4 has not impacted the FY outturn with B&M reporting a beat to our forecasts. Net debt is higher than we had expected but this reflects the investment in a Southern DC which will be sold & leased back in FY20E suggesting that our assumption of further special dividends are more than likely in the current financial year.
They added: "With outperformance across all lines of the P&L and strong LFLs, the share weakness leading into these results is overdone, in our view. B&M remains one of our core Buys in FY19E."
In early morning trading, B&M shares were down 1.6% at 366.8p.