3Q17 Update

Mixed-goods discounter B&M European Value Retail reported a very strong top-line performance in 3Q17, which ended December 24 for UK operations and December 31 for German operations. Group revenues of £789.1 million were up 21.8% from one year earlier, and at constant currency the company grew revenues by 20.5%. Year-to-date at 3Q17 period-end, group revenues were up 20.1% year over year. Group revenue growth in 3Q17 was driven by an impressive performance in the UK, which accounts for the majority of company sales. B&M UK grew revenues by 20.7% to £741.4 million in the quarter, with comparable sales jumping by 7.2%. This marked an acceleration versus the year-to-date performance of 19.1% UK revenue growth and 1.0% UK comps. In GBP terms, Jawoll in Germany grew sales by 43.2% to £47.7 million in 3Q17. In euro, Jawoll sales climbed by 18.8% in the quarter.

Company Commentary

The company noted that the strengthening of comps in the UK reflected “strong seasonal product performance, improved in-store standards for customers and the normalization of service levels from our two new distribution centers.” B&M also benefited from an extra day’s trade in the quarter compared with the previous year, which added 1.1% to the UK comparable-sales total. B&M noted that the impact of new stores on existing UK stores continued to decline, and was equivalent to 1.2% of UK comparable-sales growth in 3Q17. The company expects this impact to fall further in 4Q17, and stabilize thereafter. At the end of 3Q17, the company operated 533 UK stores, having opened 14 stores in the quarter and a net 34 in total during the fiscal year to date. In Germany, Jawoll was trading from 73 stores at the end of the quarter, having opened seven stores in 3Q17.

Outlook

The company noted only that it is confident that it will meet expectations for adjusted EBITDA in FY17. For FY17, the consensus among analysts is for B&M European Value Retail to grow revenues by 17.0% to £2.38 billion and GAAP EPS by 16.1% to 14.4 pence. Analysts expect the company to grow EBITDA by 13.0% and EBIT by 11.9%