B&M shares sank on Thursday after the discounting group issued a soft trading update for the festive period.
It appears expectations for the group were high as shares sold off despite the company seeing B&M UK revenue growth of 2.8% during the key festive trading period. The sell-off also seems unjust, given B&M announced a £151m special dividend.
B&M UK branded stores generate the lion’s share of B&M’s revenue, yet investors may be disappointed to see the group’s Heron Food branded stores sales fall 5.6%.
The market is taking no prisoners in the current environment, with numerous threats to consumer’s health putting investors on edge. As a discounter, many will have hoped B&M enjoyed a greater uptick in sales during the festive period as shoppers sought out bargains amid high interest rates and stubborn inflation.
“B&M seems to have served investors cold turkey this morning with shares sinking 10% following their Christmas trading update. The firm has taken in the top end of the guidance range despite a 2.8% revenue across what they describe as the ‘golden quarter’,” said Adam Vettese, market analyst at investment platform eToro.
“Once a stock market darling, shares more or less halved over the course of the last year as signs of slowing growth reared their head. The company continues to open new stores which on the face of it seems positive, but this initial boost of a new unit could be papering over the cracks of problems elsewhere.”