With the release of its pre-close trading statement on Tuesday (15 April), B&M European Value Retail (LSE:BME) took the first step to closing the book on what’s been a truly disastrous year. The FTSE 250 share’s slumped 39.6% in value over the last year.
Not even discount retailers have escaped the sharp erosion in consumer spending power in recent times. Typically, low-cost operators like B&M would thrive when Britons start to count the pennies.
Things could remain tough for the former FTSE 100 company as the UK economy struggles. But let’s forget about that for a moment. I’m looking at whether B&M shares could be an attractive buy for long-term investors to consider following their price collapse.
Green shoots?
Given this week’s latest trading statement, it’s fair to expect things to remain tough for the value retailer for some time yet.
At its core B&M UK division, like-for-like sales dropped 1.8% during the 12 weeks to 22 March. Corresponding revenues were up 3.2% at B&M France, but given that its UK counterpart generates around four-fifths of group sales, problems at home remain a significant concern.
Yet having said that, there are signs that trading appears to have stabilised more recently. The retailer has issued a couple of profit warnings in 2025 alone, so keeping earnings estimates unchanged can be considered a little victory for investors.
In fact, B&M said that it expects adjusted EBITDA for the 52 weeks to 29 March “to be above the midpoint of guidance.” Forecasts made at its most recent update in February suggested earnings of between £605m and £625m.
The news led to a mid-single-digit rise in the B&M share price.
Are B&M shares a potential buy?
As a long-term investor, I’ve been considering whether B&M shares could be an attractive dip buy. And especially as the price-to-earnings (P/E) ratio has fallen sharply.
At 8.8 times, this is some way below the FTSE 250 company’s five-year average of 14-15 times. This could well smack of a bargain, and especially given that trading may be stabilising.
There are things that trouble me as a potential investor, like the prospect of weak consumer confidence persisting longer than expected, as well as higher costs (and especially if crushing trade tariffs are introduced). There’s also significant uncertainty as chief executive Alex Russo gets ready to depart for pastures new.
However, there’s also a lot I find exciting about this beaten-down stock.
The value retail market is still being tipped for robust growth over the medium term. And encouragingly, B&M plans to keep expanding to capitalise on this opportunity, supported by its robust balance sheet. Its leverage ratio is tipped to be around the midpoint of its target range of 1-1.5 times, after the payment of ordinary and special dividends for last year.
The business plans to have another 45 gross new B&M UK stores this financial year, matching the same number last year. It’s also targeting 11 new shops in its strongly performing B&M France division, and 14 new Heron Foods outlets.
While it’s not without risk, B&M is one of several FTSE 100 and FTSE 250 shares I’ll consider buying when I next have cash to invest.
