B&M expects bigger profits but flags uncertainty over lifting of lockdown

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B&M European Value Retail SA (LON:BME) has upgraded full-year profit expectations but uncertainty looms over next year’s forecasts.

The discounter said that group sales will shortly resemble last year’s high levels, which were driven initially by consumer stockpiling in mid-March 2020 and continued throughout the financial year due to COVID-19.

READ: B&M to pay yet another special dividend, narrows earnings guidance

It added that it will be difficult to predict trading patterns once restrictions are lifted.

Full-year adjusted underlying earnings (EBITDA) for the year to March 27 are now expected to be £590-620mln from the previous forecast of £540-570mln.

The figure includes an £80mln repayment of business rates, in line with many other retailers that were given essential status by the government.

Revenues and margins have remained strong over the fourth quarter to date, especially in the UK.

“We have no doubt that many of the customers that B&M won during the various lockdowns will be retained and will become loyal shoppers, but it is very difficult to see like-for-like being in positive territory for the next year or so,” analysts at Peel Hunt commented.

“Long-term holders should continue to be very satisfied with their investment as the stronger customer numbers mentioned above will drive strong profit densities and the property market is firmly in all retailers’ favour. However, it is always difficult for shares to rerate in the absence of upgrades and we think our numbers are testing enough.”

Shares dipped 1% to 537.4p on Thursday morning.

–Adds analyst comment, shares–

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