B&M European Value Retail Full-Year Results – What The Analysts Said

By Steve Wynne-Jones
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B&M European Value Retail Full-Year Results – What The Analysts Said

Discount retailer B&M European Value Retail has reported a 6.6% increase in group revenue, to £4.98 billion (€5.77 billion) in its 2022/23 financial year, with CEO Alejandro Russo confident that the "long-term future looks very positive" for the group.

Here's how leading industry analysts viewed its performance.

Sophie Mitchell, GlobalData

B&M’s popularity amongst consumers as a value retailer in the cost-of-living crisis did not translate into profit in its FY2022/23 results due to the tough economic conditions on the supply side. Despite group revenue increasing by 6.6%, driven by B&M UK like-for-like (l-f-l) customer transaction numbers increasing every month since June, group adjusted profit before tax declined by 12.6% to £436m. Although consumers have flocked to the value retailer throughout the cost-of-living crisis in search of its low-priced items, the retailer has been unable to overcome the other effects of inflation with rising costs and material prices offsetting this growth in sales.

“Although remaining a small part of the Group’s business, B&M’s French fascia continues to shine bright, with sales increasing 22.1% and adjusted EBITDA rising to £41m (FY22: £32m), demonstrating the success of its expansion strategy in both stores and product ranges, as it aligns its proposition to that of B&M in the UK. The grocery department has done particularly well in France as B&M has consolidated partnerships with L’Oréal, Nestlé and Mars, reconciling its UK proposition with French consumers.

"Heron Foods also witnessed double-digit sales growth of 18.1%, highlighting the attraction of the retailer’s offer of high-quality groceries at low prices throughout the cost-of-living crisis.


“FY2023/24 looks bright for the retailer, with UK l-f-l sales increasing by 8.3% in the first nine weeks of the financial year. The broad customer support base the retailer has built throughout the pandemic and the cost-of-living crisis, combined with falling product costs as inflation declines, bodes well for the retailer as it continues to expand both in the UK and France.”

Russ Mould, AJ Bell

“During COVID, B&M benefited as one of a handful of retailers which were able to stay open and operate. Its performance during this period therefore comes with an asterisk attached, which is why investors will be particularly pleased to see its value credentials paying off in a more normal retail environment.

“In theory B&M should be well placed against a backdrop where households are really watching their pennies and that is largely reflected in this latest trading update. The company is also generating lots of cash which it can return to shareholders.

“There is the odd warning sign here and there though, which the market may give some attention to. In particular, the company’s inventory position has increased a touch – hinting at a potential slowdown in non-food sales.”


Adam Tomlinson, Liberum

"The group’s new CEO/CFO combination has delivered a strong set of prelims, holding onto most of the profit boost from COVID. Cash generation remains very impressive supporting lower net debt despite a solid ordinary div and £200m special, reflecting the strength of the group’s value proposition, its lean and capital light operating model, and benefits from the improved store standards and availability already implemented.

"The outlook remains optimistic: management highlighting the accelerating UK store opening pipeline and continued multi-year growth opportunities in France and Heron (UK). New guidance for FY24E EBITDA to be ahead of FY23, means consensus (£579m) could nudge up."

Eleonora Dani, Shore Capital

"Group revenues rose by approximately 6.6% YoY to c.£5.0bn. The B&M UK fascia experienced a 4.0% YoY increase, including a LFL growth of 0.7%, roughly in line with our expectations (4.7% and 0.9% respectively). The B&M Q4 LFL run rate of 3.2% indicates the company ended the year with momentum, aligning with our forecasts. [...]

"Considering the current macro environment, these results are encouraging. However, the B&M LFL figure may appear lower than the FactSet compiled consensus, and the inventory position, although lower YoY, has increased since January. These factors might not be received positively today. With B&M shares currently trading at an FY24F PE multiple of 12.7x and an EV/EBITDA multiple of 6.5x, we believe investors will be eager to learn more about the underlying trading performance of the Non-Food division and gain a clearer understanding of the FY24F guidance beyond the vague statement of it being 'higher than'."


David Hughes, Stifel

"B&M has seen a strong start to FY24 trading, with UK LFL sales up 8.3%. In addition, management plans to support this LFL growth with an additional 60 stores (30 B&M UK, 10 B&M France, 10 Heron Foods), which would represent a 4% increase in estate. Overall, B&M is guiding for FY24 adj. EBITDA to be higher than FY23 (Stifel forecast: 4% growth).

"Our target price is based on forward PER multiples relative to a basket of 16 peers and historical trading ranges, with reference to a discounted cash flow calculation. The key risks to our target price relate to the UK macroeconomic cycle and LFL growth prospects (or lack thereof) for B&M. Lower UK GDP, high inflation and pressure on household budgets could all affect UK consumer spending including on discount general retail."

Read More: Discount Retailer B&M Forecasts Higher 2024 Core Profit

© 2023 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

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