B and M Shares Decline Despite Analysts Describing First Quarter as In Line with Expectations

Shares in B&M European Value Retail SA declined following the publication of its first quarter trading update, although market analysts maintained that the results broadly aligned with forecasts and did not materially alter the investment thesis for the discount retailer.

The FTSE 250 constituent saw its share price fall 5.8% to 192.1 pence during early afternoon trading on Wednesday. The decline followed the release of figures showing like-for-like sales in the UK decreased by 2.3% during the first quarter, with the company citing a weaker start to the garden season as a contributing factor to subdued demand.

Trading conditions improved progressively through May and June as warmer weather patterns returned. The company reported that sales performance in France and at its Heron Foods operation both exceeded expectations during the period.

The market response appeared at odds with commentary from equity analysts covering the stock. Jefferies characterised the trading performance as very much in line with expectations, noting that management had previously indicated at the June annual results presentation that the quarter would face challenging year-on-year comparisons due to unusually favourable spring weather conditions in the prior year.

The broker highlighted that general merchandise categories returned to growth during May and June, whilst inventory levels concluded the period at normalised levels. Jefferies observed a modest improvement in the two-year like-for-like sales trajectory, although the analysis was complicated by the timing of the Easter holiday. The broker concluded that the update provided little evidence to suggest any revision to consensus forecasts would be warranted.

Peel Hunt similarly described the quarter as progressing on track, emphasising that general merchandise sales achieved year-on-year growth in May and June and that seasonal inventory finished the period at normal levels. The broker noted that B&M entered the second quarter with reduced seasonal volatility and a more stable operational foundation.

Management reiterated confidence that investments being made under its Back to B&M Basics turnaround programme would contribute to rebuilding group profitability over the medium term. The company stopped short of upgrading its guidance for the full year.

Peel Hunt assessed the first quarter as solid, with performance consistent with its own forecasts and broader market conditions. The broker anticipated that consensus estimates would remain largely unchanged following the update. Citing significant recovery potential, Peel Hunt maintained its buy recommendation on the stock.

Jefferies retained a hold rating with a price target of 180 pence, which implies downside from current trading levels.