B&M Shares (LON: BME) Up Strongly As Q1 Revenue Rises

B&M European Value Retail (LON: BME) reported a solid start to its financial year on Tuesday, with group revenues increasing by 2.4% in the first quarter to £1.345 billion. The BME share price has been steadily climbing through the early part of trading, now up 3.74%.

The company revealed that this growth was driven by a combination of increased sales volumes and a successful store expansion program across its UK, French, and Heron Foods businesses. B&M France was the fastest-growing segment during the quarter, with revenue increasing by 7.5% to £126 million.

B&M's UK business opened 19 new stores during the quarter, ahead of its target of 45 for the full year. Notably, all stores opened since last year are outperforming expectations. In France, B&M added two new stores and remains on track for a total of 11 new openings this year.

While like-for-like sales in the UK declined by 3.5%, excluding the impact of Easter timing, this was compared to exceptionally strong growth in the same period last year.

The company highlights a well-executed seasonal stock purchase, particularly in gardening, which resulted in high sales and minimal markdown risk.

“The growth fundamentals of our business are strong, with a highly disciplined approach on pricing, product and high operational standards,” said Alex Russo, B&M's Chief Executive. “As we transition towards Autumn/Winter in the months ahead, our relentless focus on Everyday Low Price and Everyday Low Cost will ensure we continue to serve our customers well.”

B&M added that it is confident it's “well-positioned” for the remainder of the year, with a strong product range, competitive pricing, and robust logistics infrastructure. The company expects to deliver profitable cash-generating growth throughout the financial year.

At the end of June, analysts at Morgan Stanley downgraded B&M to Underweight from Equal Weight with a price target of 433p, down from 575p.

The US investment bank said B&M's growth is slowing and they believe its margins will contract year-over-year in fiscal 2025, which is a worse outlook compared to UK retail peers.