B&M continues to provide positive surprises

B&M European Value Retail (LON: BME) is set to report interims on Thursday (12 November). B&M has been one of the stronger retail performers during the Covid-19 pandemic and the results should provide further information about whether that is continuing.

The fully listed value retailer is classed as an essential retailer in the UK, so it has been able to stay open. It operates discount retail stores in the UK and France, which sells food and drink, housewares, textiles, garden products, electricals and DIY goods. The French stores trade under the Babou brand. There are also more than 275 Heron Foods convenience stores in northern England.

Interims

Management has already said that underlying EBITDA will be better than the previously indicated range £250m to £270m. The interim figure is likely to be £285m. Group revenues were 25% ahead with like-for-like growth of 23% for the UK stores during the period.

The stores in France came out of lockdown on 11 May and they made a small positive EBITDA contribution.

People have been spending more each time that they visit a store. Nine new UK stores were opened in the first half, although eight older stores were closed. There could be up to 45 stores opened in the UK in the current financial year.

Forecast

A full year pre-tax profit of £425m is forecast, up from £243m last year. If third quarter trading remains strong and B&M has a good Christmas there could be scope for an upgrade.

The share price has performed strongly this year and it has increased by 30% since the beginning of 2020. It is also more than double the low point in the middle of March.

At 534.6p, the market capitalisation is £5.35bn. The forecast multiple for the current year is 16, which still does not seem high given the positive trading there has been.