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FTSE 100 shares: B&M’s share price slumps as sales slow!

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The FTSE 100 is struggling for momentum on Thursday as investors await key US jobs data tomorrow. Renewed fears over soaring inflation — and whether central banks will tighten monetary policy to rein in runaway price rises — is also affecting confidence on UK share markets.

As a result the FTSE 100 is a full 1% lower from Wednesday’s close and edging back towards 7,000 points. But today’s drop is pretty modest compared to the individual falls being reported by some of Britain’s blue-chips.

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Take B&M European Value Retail (LSE: BME), for example. This Footsie-quoted business has dropped 5% following the release of full-year trading numbers. It had struck its lowest since early April around 533p per share earlier in the session.

Sales rocket at the FTSE 100 firm

B&M has dropped after warning that results for this fiscal period are likely to recede from the last year’s blockbuster levels.

The FTSE 100 firm saw revenues soar 26% during the 12 months to March 2021, to £4.8bn. Sales at its core B&M­-­­branded stores rose almost 30% year-on-year, to £4.1bn, while on a like-for-like basis, revenues here jumped 24% from fiscal 2020.

Consequently B&M saw profit before tax more than double year-on-year to £525.4m (up 108% to be precise).

The company added a net 25 stores to its estate last year, it said. The majority of these were weighted towards the second half because of coronavirus-related delays earlier in fiscal 2021.

Revenues predicted to fall

Commenting on last year’s numbers, B&M chief executive Simon Arora said that the firm’s results “reflect the speed at which we responded to the challenges presented by Covid-19, and the strength of our execution.” 

Arora painted an uncertain picture looking ahead, however. He said that “there are many uncertainties as society slowly emerges from lockdown and trading patterns are likely to be unpredictable for much of the year.

Trading has been “volatile” in the first nine weeks of the current financial year, it said, and like-for-like sales at the FTSE 100 firm’s B&M­ stores are down 1% from the same period a year earlier. The company said that it expects comparable revenues to fall for the whole financial year versus financial 2021 levels.

What the brokers say

Following today’s update, analyst Sophie Lund-Yates of Hargreaves Lansdown commented that “part of B&M’s strength lies in the location of its stores, mainly in retail parks out of town where footfall has rebounded much more sharply than in high street locations.” She said too, that its “pile it high sell it cheap mantra is also likely to continue to be a big draw for shoppers while economic uncertainty remains as consumers usually opt for value brands when times are tight.”

Lund-Yates added, though, that “now that other retailers have been able to fully open up once more, competition will undoubtably be tougher”. And therefore it will be a challenge for the FTSE 100 company to repeat last year’s blowout results, she said.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended B&M European Value and Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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