Shares in B&M European Value Retail (LON:BME) leapt 17% to a new year-high after the company reported a return to growth in UK sales. The rally takes the gain in the stock price to more than 90% year-to-date.
Return to growth in the UK
For the six months to September, the group reported a 3.6% increase in sales to £2.85 billion. All three businesses – UK, France and Heron Foods – reported an increase in LFL (like-for-like) growth.
In the UK, overall sales were up 2.4% with LFL sales up 0.4% during the half. Importantly, LFL growth improved to 3.2% in Q2 against a 2.3% decline in Q1 thanks to better general merchandise sales.
B&M France delivered a 13.7% increase in overall sales with 5.9% LFL growth. Heron Foods, the smallest division, grew sales by 3% supported by 2.9% LFL growth.
Group adjusted pre-tax profit rose 16.6% to £121 million, while net free cash flow more than doubled to £132 million. Thanks to strong cash generation through higher profit, accelerated working capital benefits and investment phasing, leverage was reduced from 1.6 times to 1.3 times.
CEO Tjeerd Jegen commented: ‘We are restoring profitability through re-establishing UK LFL sales growth and improving our UK category margin while managing cost headwinds and investing in our business. This will support our ambition of achieving low double-digit adjusted EBITDA margins for B&M UK in the medium term as an outcome.’
B&M European Value H1 2027 results (all £ millions)
| H1 2027 | H1 2026 | Change | |
| Revenue | 2,848 | 2,749 | +3.6% |
| UK | 2,248 | 2,296 | +2.4% |
| France | 319 | 280 | +13.7% |
| Heron Foods | 281 | 273 | +3.0% |
| Pre-tax profit | 121 | 103 | +16.6% |
Source: Company accounts
We flagged the revival in B&M’s fortunes back in July in our ‘Magic mid caps’ article. New management and a ‘Back to Basics’ plan has seen the firm return to positive LFL growth.
That understates the changes which have taken place, says Simon Murphy, manager of the VT Tyndall Unconstrained UK Income Fund (BYX0D61). Murphy points to the ‘selective’ offering, better product availability and increased promotional activity as helping drive sales.
Interestingly, UK retail has been a popular yet unsuccessful hunting ground for hedge funds. As of the end of October, around 7% of B&M’s shares were on loan to short sellers.
At the current price of 327p, that means short sellers have to buy back around £225 million worth of shares. That may be part of the reason behind today’s outsize move, as clearly shorting B&M hasn’t worked.
