Discount retailer B&M European Value Retail has announced a 17.0% increase in group revenue at constant currency levels in full-year 2018, to £3.49 billion (€3.95 billion).
Commenting on its performance, which was boosted by 44 net new store openings, Simon Arora, chief executive, said that the group has “again delivered strong results against the challenging backdrop of continued structural change in our industry, rising costs and uncertain times for consumers".
Here's how leading industry analysts viewed its performance:
Hannah Thomson, GlobalData
"B&M knows it cannot rely on growth driven by new store openings alone, and will be keen to improve on what it clearly sees as a disappointing year for l-f-l growth, which at 0.7% is well below the 4.7% achieved in FY2017/18. A strong performance in toys and seasonal categories such as gardening was offset by homewares, which was a particular lowlight this year, dragging down l-f-ls, which would have been 1.8% higher excluding homewares.
"After a weak Q2 and Q3, actions to overhaul the homewares range were swiftly taken, and this remains a strategic focus for the discounter, as midmarket retailers such as John Lewis struggle. While B&M will be relieved that Q4 and the start to Q1 have seen more positive l-f-ls (in Q4 l-f-ls increased by 5.8%), these will have been aided by weaker comparatives caused by the timing of Easter and poor weather last year, meaning l-f-ls will need to be scrutinised to assess its performance over the next year.''
Greg Lawless, Shore Capital
"In terms of valuation, B&M trades on a forward one year (year to March 2020) PE multiple of 16.7x and an EV/EBITDA multiple of 12.2x. In our view, these results are solid and inline with consensus for FY2019.
The outlook statement is positive in tone. There remains much to do in the French and German business to bring the B&M direct sourcing model to these markets over the next two years. Q4 was strong in the core UK business and this trading momentum has continued into the first few weeks of FY2020 with a record Easter (despite the political backdrop) and mid-single digit LFLs during the period. Management expects that
FY2020 LFLs will moderate from these levels in the full year. In our view, this is a business with trading momentum and a winning discount formula that resonates with customers."
Liberum Consumer Discretionary Team
"FY 19 underlying EBITDA of £312.m (+12% y-on-y) is bang in line with consensus, while PBT is -3% below at £240m. The core UK B&M fascia continues to perform well with very strong Q4 LFLs of +5.8%, helping to deliver core B&M EBITDA growth of +14%. Management notes Q1 has started well with LFLs continuing in mid-single digit territory.
"We expect FY20E EBITDA consensus to come down slightly from £360m currently to c.£345-350m. Today’s results are a slight mixed bag. We continue to like the long-term story, but there are clearly issues to overcome and international, particularly Germany, needs to show signs of improvement to give greater confidence that B&M’s proposition will resonate and the management can make it work outside the UK."
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
