B&M European Value Retail SA (LON:BME) said sales growth was slower than anticipated in the run-up to Christmas amid a challenging market and its decision not to further discount its products before Christmas.
The FTSE 250-listed variety store said group revenue rose 9.3% on a constant currency basis in the 13 weeks 28 December, versus 12.3% growth in the first half of its financial year.
READ: B&M shares slide to a discount as German business tanks
UK stores grew sales 8.8%, with like-for-like (LFL) sales up 0.3%, which was also slower than the 13.8% in the first half and the LFLs of 3.7% but still well ahead of most other retailers in the country.
German chain Jawoll, which sparked a collapse in profits in the first half as a £59.5mln impairment charge was taken due to its poor performance, saw sales fall 1.5% on a constant currency basis.
The strategic review announced in November to determine Jawoll’s future is still ongoing.
Across the group, six new stores are planned to open in the final quarter, following 15 site openings in the past quarter.
“Costs were well controlled and, combined with our usual strong focus on cash gross margins, yielded a profitable outcome,” chief executive Simon Arora said in a release.
According to analysts, avoiding promotions on toys and seasonal products caused a drag on sales.
"In our opinion, over the next six months, in order to see a re-rating; B&M need to demonstrate stronger like for like sales in the UK, as well as exiting the German market without significant cash cost and convincing the market French retailer Babou will succeed," Amisha Chohan, retail research analyst at Quilter Cheviot, said in an email.
Shares dropped 9% to 360.9p on Friday morning.
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