That closing 90 minutes on Friday was brutal. |
 ... like-for-like sales in the UK business remain 3.6 per cent lower than last year, with growth fuelled purely by new store openings. This has concerned analysts in the past, not least because it means B&M’s lease liabilities keep climbing. Net debt to adjusted Ebitda including leases rose from 2.4 times to 2.5 times in the period.
News from the boardroom may also have worried investors. Bobby Arora – the group's trading director who bought B&M with his brother in 2004 – will retire in March 2025. Although he is to be replaced by Gareth Bilton, who has been with the company for 25 years, analysts warned that the market may be “miffed”.
Profits require close scrutiny too. While adjusted Ebitda edged up to £274mn in the period, adjusted operating profit declined by 1.8 per cent and statutory numbers were hit by £23mn of adjusting items.
Shares in B&M have struggled this year, and the group looks cheap on a forward price/earnings ratio of 9.7, versus a five-year average of 14. However, forecasting tends to be a little vague at the retailer and we are concerned by the UK’s lack of like-for-like growth. Downgrade to hold. (Jemma Slingo at IC) |
Peel Hunt: B&M shares cheap
hxxps://citywire.com/funds-insider/news/expert-view-burberry-science-in-sport-keller-boohoo-b-and-m/a2454471?page=5 |
The 5% spike from release of those results didn't last long. |
Some very negative reactions and question marks reported in The Grocer mag. Mostly to do with what B&M (suspiciously!) didn't say rather than what it did say:
B&M faces ‘moment of truth’ after mixed results
By Harry Holmes14 November 2024
B&M Bargains
Analysts were split on the half year results
---
B&M faces a “moment of truth” over the Christmas period after splitting opinion on its financial results for the first half of the year.
The company maintained its profit guidance for the full year after group revenues rose 3.7% to £2.6bn due to strong volume growth.
“This is a good performance as we annualise a record prior year of earnings growth with strong first half comparatives,” said CEO Alex Russo.
However, like-for-like sales in the UK fell 3.6% meaning most of this growth was fuelled by opening new stores. This is worrying some investors, who are concerned about the company’s climbing lease liabilities.
B&M opened 39 new stores in the six months to 28 September as it looks to hit its long-term target of 1,200 UK stores, up from 764 today.
“Discount chain B&M has had a rough year and while these latest first-half results didn’t exactly knock it out of the park there was enough encouragement for investors to latch on to,” said AJ Bell investment director Russ Mould.
B&M’s share price has struggled this year, with its price down 34% relative to the all-share index. Many investors are wary of the retailer’s history of vague forecasting and these results, unusually, did not include any mention of its performance in the latest third-quarter.
“There may be a touch of disquiet at a lack of guidance on third-quarter trading and the ‘golden quarter’ could be a moment of truth for B&M,” said Mould. “It faces a tough competitive environment, with pressure not only from direct rivals like Home Bargains but also the supermarkets.”
While the early reaction in the markets was largely positive with B&M’s share price up 5%, there continue to be dissenting voices.
B&M has been a bit of a rags-to-riches story, however, the engine has cooled materially and this H1 performance fulfils all of our prior apprehensions,”; said Shore Capital analyst Clive Black.
Black raised concerns over B&M’s transparency, pointing to its reporting of like-for-like sales (LFL) in the UK but excluding the information for the whole group. This is “brewing a storm and is somewhat cowardly”, said Black.
He added: “The erosion of reporting transparency, largely around LFL sales, is a sign of weakness not strength to us in B&M’s headline performance, as if market participants will not suss it out,” he added.
Elsewhere, however, the reaction was more positive. “B&M’;s laser focus on price means its value-for-money advantage is widening and volumes are growing, especially and crucially in non-food,” said Peel Hunt. “We expect continued strong sales-led growth, towards the top end of our structural growth subset.”
Bobby Arora, the group’s trading director who bought B&M with his brother in 2004, will retire in March 2025 and be replaced by Gareth Bilton, who has been with the company for 25 years.
B&M is also planning a new imports centre in Cheshire to support its hundreds of new stores. This will manage inbound container flow and optimise the capacity of its five distribution centres. |
Taking over those Wilko stores must have generated a barrowload of admin. |
In the first half 2025 the gross profit was up 5.8%. There was a huge increase in administrative expenses from 666 to 761 that's a 14.3%increase so operating profits were lower that last time. Was there any explanation of this on the web cast? There is no mention in the interim report. This is the main reason for the fall in earnings. Everything else looks OK in the first half. |
Under the Aroras it felt like a fast moving, entrepreneurial business. Under Russo it feels like a penny pinching, bureaucracy run to a script. Time will tell if this is what the business needs. |
Not much golden about the continuing share price slide! I would settle for bronze but looking like tin plate at the moment. |
With the Golden Quarter about halfway through there were one or two hints that they expect Q3 to be at top end of expectations. |
red sea shipping costs, ni, slowing consumer all these issues have been/are a worry but at the current 10 times its prob in the price. excellent fcf at the last read, i think it should at least outperform the sector at worst and a base case should be for some capital appreciation despite a dodgy looking chart. the shares have seen strong weeks like this one is shaping to be yet the following week it headed lower again. |
Nothing wrong with these results, so hard to see justification for fall over last 3-4 months.Yes, working capital has increased, but this has been adequately explained.Yes, the rate of growth has been less, but it is still growth and looks like a small perturbation.The company sounds very bullish and you have to be impressed they are already buying for 12 months ahead.With their strategy set on growth through volume alone, and with lots of new stores coming along at a 12-month payback to provide that growth, the share price should have been rising over the past 3 months not falling. Adding back the fall, then adding something for the future growth, surely we should be looking at 500p plus. |
Err ...640M from 622.5M is rather less than 28% unfortunately. It is 2.8% ! |
That's a mid-range to mid-range increase of 28%
EDIT: Losing my marbles here - dot missing. It's 2.8%. Thanks Wad! |
The most interesting bit to me is the outlook;
With growing volume momentum, and with broadening strength in general merchandise, we are confident in our outlook for the second half and the full year. We anticipate full-year Group adjusted EBITDA2 (pre-IFRS 16) to be in the range of £620m-£660m (FY24 52/53 weeks: £616m/£629m). |
Mr Billington and Mr Mayman I think would be surprised that their initials were still featured in the storefront badge, and shoppers won't have a clue (or care) who they ever were. But the style of that facia makes no pretense at the stores being anything other than a lowpriced outlet. And that's going to do the company no harm in the ongoingly belt-tightened world this Xmas. Where it tops the likes of Aldi and Lidl is in selling a lot more of the recognized brands among the food and toiletry offerings. Image-conscious Waitrose/M&S customers might only dare go in disguise of course, or send someone in with a list. Or be shopping for a friend. I've been in (call me frugal) but the nearest branch (12 miles away) is further than I go for routine shopping. |
Reversing now, sinking in profit lower going forwards. |
- and testing the Oct 30 close (402.25) next? |
up 3% in opening 3 minutes pausing at Nov 4 (392.6) close .. |
Think they announce this after Christmas trading? |
So no 20p Special ? |
Financial results (unaudited)
H1 FY25
H1 FY24
Change
Group revenue
£2,644m
£2,549m
3.7%
Group adjusted EBITDA2 (pre-IFRS 16)
£274m
£269m
2.0%
Group adjusted EBITDA2 (pre-IFRS 16) margin %
10.4%
10.5%
(18) bps
Group adjusted operating profit2
£258m
£263m
(1.8)%
Group statutory operating profit
£235m
£275m
(14.6)%
Group statutory operating profit margin %
8.9%
10.8%
(190) bps
Post-tax free cash flow5
£73m
£143m
(49.2)%
Group cash generated from operations
£303m
£352m
(14.1)%
Group statutory profit before tax
£169m
£222m
(23.8)%
Adjusted (pre-IFRS 16) diluted EPS2
14.7p
15.4p
(4.8)%
Statutory diluted EPS
12.3p
16.3p
(24.9)%
Ordinary dividends6
5.3p
5.1p
3.9% |
WAs any 20p Special announced for January.Like the last 3 years ? |
grabster,
just perused the chart again and you are correct and no real support until about 320 area. I guess today's results will determine if a meaningful bounce is likely . I live in OZ at present and midday here with 3 hours until announcement . |
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