What B&M European Value Retail (BME) Said on Its H1 Earnings Call

Key Points

• B&M UK returned to like-for-like sales growth, up 3.2% in the fiscal second quarter, and the company forecast full-year adjusted EBITDA of £450 million to £500 million.
• The turnaround plan lifted U.K. trading gross margin by 94 basis points in the first half, offsetting wage, expansion and supply-chain costs; management expects cost pressures to persist in the second half.
• B&M is trialing redesigned stores after a Wigan refit generated a strong sales uplift, while cutting its fiscal 2027 U.K. store-opening forecast to 15–20 from 25–35. France and Heron Foods also reported positive like-for-like sales growth.

B&M European Value Retail LON: BME returned to positive U.K. like-for-like sales growth in its fiscal 2027 second quarter and issued full-year profit guidance, as the discount retailer tests store changes intended to increase sales and margins.

B&M UK’s like-for-like sales rose 3.2% in the quarter, led by general merchandise. Chief Executive Officer Tjeerd Jegen said food and other fast-moving consumer goods improved during the quarter, ending it flat, and had returned to growth in the third quarter. Current U.K. trading was broadly in line with the second-quarter performance, he said.

The company forecast full-year adjusted EBITDA before IFRS 16 of £450 million to £500 million and adjusted pretax profit of £280 million to £330 million. Interim Chief Financial Officer Pete Waterhouse said the EBITDA range compares with £459 million in the prior year.

Margin gains offset cost pressures

Jegen said B&M’s first phase of its turnaround plan, called “Back to B&M Basics,” is beginning to deliver. The program has focused on pricing, promotions, product availability and reducing the number of items carried in stores.

B&M UK’s trading gross margin improved by 94 basis points in the first half, helped by general merchandise margins and reduced stock losses, Waterhouse said. Those gains offset cost pressures, leaving the U.K. EBITDA margin broadly stable year over year.

Costs included wage increases, expansion of the store estate and investment in the supply chain. Waterhouse said two new distribution centers were fully operational but had not yet reached their most efficient levels. The company expects those pressures to continue in the second half and is working on a cost-reduction program.

Jegen said the company expects year-over-year category margin growth to continue in the second half. He also said B&M would prioritize its price position against its main competitor rather than protect margins at the expense of competitiveness.

Store trials take priority over openings

B&M is testing revised layouts and targeted refits as part of the second phase of its strategy. Its most extensive trial is a redesigned store in Wigan, which reopened at the end of August with a larger entrance area, more prominent seasonal displays and self-service checkouts.

Jegen said the Wigan store had produced a strong like-for-like sales uplift, primarily through higher transaction volumes, while cash margin was growing faster than sales. He did not provide figures for the increase and said the company needed more data before drawing wider conclusions.

Three more stores have received Wigan-style refits in the current quarter, and another 10 are planned for the fourth quarter. B&M is comparing performance with control stores to determine which features deliver the best returns.

The retailer reduced its forecast for gross U.K. store openings in fiscal 2027 to 15 to 20, from 25 to 35 previously. Jegen said the change reflected a shortage of locations meeting investment thresholds rather than a deliberate decision to slow expansion for the trials. B&M expects to return to 25 to 35 gross openings in fiscal 2028.

France and Heron sustain growth

B&M France reported first-half like-for-like growth of 5.9%, with second-quarter growth of 6.5% against a 9.4% increase a year earlier. Jegen said the French business contributed £7 million of the group’s £12 million increase in first-half adjusted EBITDA.

The company had 156 stores in France and expects to open 15 to 20 there in fiscal 2027. Jegen said French restrictions on new retail space and the size of B&M’s stores make suitable locations harder to find.

Heron Foods delivered second-quarter like-for-like growth of 3.1%, its second consecutive positive quarter, and growth continued into the third quarter, Jegen said. He also announced that Michael Fletcher would succeed Tony Dobbs, who is stepping away from executive life after 35 years with Heron.

B&M declared an interim dividend of 3.6 pence per share. Waterhouse said leverage was 1.3 times, but cautioned that some working-capital benefits had arrived earlier than expected and capital spending would be weighted toward the second half.

About B&M European Value Retail (LON:BME)

B&M European Value Retail S.A. operates general merchandise and grocery stores. The company operates a chain of stores under the B&M, Heron Foods, and B&M Express in the United Kingdom; and stores under the B&M brand in France. It also provides property management services. The company was founded in 1978 and is based in Munsbach, Luxembourg.

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