B&M European Value Retail SA (LSE:BME)’s first-quarter was “as positive as we could have hoped for,” according to Liberum.
Analysts at the investment bank highlighted in the first-quarter update that like-for-like sales in the most recent eight weeks were only down 1.6%, an improving trend which is “very encouraging.”
Guidance for underlying earnings (EBITDA) of between £550mln- £600mln remained unchanged.
At the midpoint, according to the broker, that is 68% above pre-COVID levels and highlights the board’s confidence in keeping a hold of the gains made during the pandemic.
Furthermore, it is the first time since the company’s IPO in 2014 that guidance on profit has explicitly been provided in preliminary results, a further sign of the board’s confidence according to Liberum in keeping hold of new customers.
On the matter of new customers, 78% of those who visited the stores came in again, said the analysts and the expectation is that it will acquire more in the coming months.
That is largely due to the retailer being more than 15% cheaper than supermarkets, with 93% of its items less than £20, putting it in a favourable space while consumers’ finances are squeezed.
Simon Arora stepping down, who has been in the role for 17 years, will have raised some eyebrows.
However, a clear and simple plan means the transition to Alex Russo stepping up from CFO should have little to no impact.
Liberum maintains buy rating, with target price set at 685p.