LONDON (ShareCast) - (Sharecast News) - B&M European Value Retail was under the cosh on Friday as it reported slower-than-expected third-quarter sales against a "challenging backdrop".
In an update for the 13 weeks to 28 December, the retailer said group revenue grew 9.3% at constant currency to £1.19bn, with UK stores revenue growth of 8.8% and UK stores like-for-like sales growth of 0.3%. Analysts had been expecting UK LFL store growth of 2.5%.

B&M attributed the weaker-than-expected performance to a "challenging" broader retail market and its decision not to engage in any early discounting.

Revenues at its French business, Babou, increased 29.3% on a constant currency basis, while revenues at German business Jawoll - for which it is currently carrying out a strategic review - declined 1.5%.

B&M said it had seen a "positive" start to January trading. However, it cautioned that the outlook for the rest of the quarter could be impacted by adverse weather.

Chief executive Simon Arora said: "Against the backdrop of a difficult UK retail environment with reduced shopper footfall and political uncertainty, our core B&M UK business generated continued growth and delivered a record level of peak season sales.

"Cumulatively, B&M UK has achieved +2.3% LFL sales growth during the financial year to date, albeit with a slower performance than anticipated during the run up to Christmas.

"Overall the business delivered a good quarter operationally. Costs were well controlled and, combined with our usual strong focus on cash gross margins, yielded a profitable outcome. We were also able to exit the period with normal seasonal inventory levels. Our new store programme delivered 15 gross and 12 net new B&M UK stores in the quarter, and this year's openings as a whole have performed better than expectations."

At 0900 GMT, the shares were down 9.2% at 360.70p.

RBC Capital Markets said: "B&M is a space driven model but the market is likely to be concerned about the LFL run rate, particularly as comparisons become tougher in Q4."

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