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Our monthly Ice Best Buys Now are designed to highlight our team’s three favourite, most timely Buys from our growing list of income-focused Ice recommendations, to help Fools build out their portfolios.
“Best Buys Now” Pick #1:
B&M European Value Retail (LSE: BME)
- The UK’s leading discount retailer continues to struggle with falling like-for-like (LFL) sales as weak consumer confidence impacts sales of the general merchandise the group is known for.
- However, LFLs are improving, with the Q4 outrun of -1.8% at its B&M UK stores the best figure posted all year. And the group will now be lapping an easier comparative period going into FY26.
- While the core B&M estate has struggled to generate same store sales growth, the addition of new stores, very good trading from B&M France, and solid Heron Foods performance led to total annual revenue rising 3.7% to £5.6bn.
- Same store sales growth and correct product ordering are the keys to positive operating leverage. While LFL sales disappointed it looks like stock levels were solid, which kept discounting to a minimum. That helped keep adjusted EBITDA right in the middle of the recently updated guided range of £605m-£625m. Down from the year prior but still significantly ahead of pre-covid figures.
- B&M is in a transition period with the hunt continuing for a new CEO that will need to formulate a plan to reinvigorate LFL sales. But after a great performance through the pandemic and in the years immediately after, we knew the group would finally go through a rough patch.
- We remain confident the business can thrive in the long-term and with a valuation of under 10x consensus estimated forward earnings while kicking off substantial shareholder returns, we think B&M is worth considering in April.
