B&M European Value Retail (LSE:BME) delivered revenue growth in the year to FY26, although profitability came under pressure as margin challenges and higher operating costs weighed on earnings.
Group revenue increased 3.6% to £5.78 billion during the period, supported by continued expansion across its store network and solid performances in key markets. However, adjusted EBITDA declined by 25.9%, while adjusted profit before tax fell 37.7%, reflecting a more challenging trading environment, particularly within the UK business.
The retailer’s core UK operations generated sales growth of 2.9%, although like-for-like sales remained unchanged. In France, the business achieved double-digit revenue growth and continued to gain market share within the discount retail segment. Meanwhile, sales at Heron Foods were slightly lower than the previous year.
Turnaround Programme Focuses on Value and Simplicity
Management is continuing to implement its “Back to B&M Basics” strategy, which is designed to improve operational efficiency and restore stronger sales and margin performance.
Key initiatives include sharpening the company’s value proposition through more competitive pricing, reducing the number of stock-keeping units (SKUs) and accelerating the clearance of discontinued inventory. The retailer believes these actions will help improve like-for-like sales trends while creating a more streamlined and customer-focused product offering.
The company has indicated that FY27 will remain an investment year as it continues to execute the turnaround programme and lays the groundwork for longer-term improvements in profitability.
Strong Cash Flow Supports Balance Sheet
Despite lower earnings, B&M continued to generate strong cash flow during the year, enabling the company to reduce net debt and maintain leverage within its target range.
The group also recently completed a redomicile to Jersey, a move intended to simplify corporate administration and provide greater flexibility when returning capital to shareholders.
In addition, management announced that future market guidance will focus on adjusted profit before tax rather than EBITDA, bringing reporting practices more closely into line with those of other major UK retail companies.
Attractive Valuation Balanced by Market Caution
From an investment perspective, B&M presents a mixed picture. The company continues to benefit from a relatively low earnings multiple and an attractive dividend yield, factors that may appeal to value-oriented investors.
However, technical indicators currently point to weaker market momentum, suggesting some near-term caution. While the underlying business remains financially stable, investors are likely to monitor progress on margin recovery, leverage management and cash flow generation as the turnaround plan develops.
More About B&M European Value Retail SA
B&M European Value Retail is a leading discount retailer operating across the UK and France. The group runs nearly 800 B&M stores in the UK, more than 340 Heron Foods and B&M Express locations, and 147 stores in France. Listed on the London Stock Exchange and a constituent of the FTSE 250, the company specialises in value-priced general merchandise and fast-moving consumer goods, serving cost-conscious consumers across its core markets.
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