ii view: B&M shares rally 15% despite profit plunge
Putting a tough year behind it and looking forward under a former Tesco executive’s back-to-basics plan. We assess prospects.
3rd June 2026 11:45
by Keith Bowman from interactive investor
Full-year results to 28 March
- Total revenue up 3.6% to £5.78 billion
- Adjusted profit (EBITDA) down 26% to £459 million
- Final dividend of 6.1p per share
- Total ordinary dividend for the year down 36% to 9.6p per share
- Net debt down 16% to £656 million
Chief executive Tjeerd Jegen said:
"We launched our Back to B&M Basics plan in October to restore like-for-like sales growth at B&M UK, which was flat overall versus FY25 while showing sequential improvement. The past six months has seen us sharpen our pricing, improve on-shelf availability in best-selling brands and revamp our in-store promotions.
“FY27 remains a year of investment as we work hard to deliver growth under Back to B&M Basics and balance new store growth with investing in our store formats under Phase 2 of our strategic plan.”
ii round-up:
B&M European Value Retail (LSE:BME) today detailed profits that matched expectations, with the discount retailers ‘back to basics’ strategy helping generate increased free cashflow.
Adjusted profit (EBITDA) for the year to late March fell by just over a quarter to £459 million. Cash generation from operations rose 2.2% year-over-year to £801 million, helping reduce group net debt by 16% to £656 million.
Shares in the FTSE 250 company rose 16% in UK trading having about halved over the last year. The FTSE 250 index has risen by almost 11% over that time. Next (LSE:NXT) has gained around 2% while shares for Tesco (LSE:TSCO) are up 10%.
B&M operates almost 800 variety stores across the UK, as well as 342 Heron Foods and B&M express stores and 147 B&M branded outlets across France.
Management flagged a slow start to garden sales for the new financial year at its variety stores in April but with a pick-up in May. Product changes aided a positive start at Heron Foods, with market share gains helping early year performance in France.
A final dividend of 6.1p per share is payable to eligible shareholders on 31 July, bringing the total payment for the year to 9.6p. That’s in line with a policy to pay out between 40% and 50% of after-tax adjusted earnings, but down from last year’s total payment of 15p per share.
A previously flagged redomiciling of the company to Jersey was completed in February, simplifying administrative processes and enabling increased flexibility in returning cash to shareholders, including for future share buybacks.
A first-quarter trading update is likely to be announced mid-July.
ii view:
Started in 1978, B&M came to the UK stock market in June 2014. Today, the seller of Fast-Moving Consumer Goods (FMCG) such as toiletries, candies and cosmetics, competes against rivals like Aldi and Lidl, and even home focused retailers such as B&Q owner Kingfisher and furnishings group Dunelm. Its B&M variety stores generated most sales over this latest financial year at 80% with the balance of sales split relatively evenly between Heron Foods and France.
For investors, required investment in product pricing and changes to improve operational performance, as well as higher operating costs, have hurt profits over this latest year. Intense competition including online rivals such Amazon and China's Temu cannot be ignored. As with all retailers, the weather can influence demand, while group net debt including store leases of £2.1 billion compares to a stock market value of £1.98 billion.
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More favourably, the CEO, a former Tesco executive, is overseeing a performance improvement plan. New store openings continue to be made, with 33 net new stores opened over this latest financial year. A diversity of product and geographical location exists with potential to increase French store numbers, while group net debt has been reduced so that the ratio of net debt to adjusted profits (EBITDA) stays within management’s target range.
For now, pressured profits provide continued room for caution. However, an ongoing turnaround plan and forecast dividend yield of over 5% are likely to keep more speculative investors interested.
Positives:
- Diversified product range
- Previous payment of special dividends
Negatives:
- Uncertain economic outlook
- Exposure to currency movements
The average rating of stock market analysts:
Cautious buy
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