B&M European Value Retail dishes out special dividend after profits rocket

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B&M European Value Retail SA (LON:BME) has announced it will pay a special dividend on top of an interim distribution to return surplus cash to shareholders after a stellar first half.

The FTSE 100 firm raised the interim payout by 59% to 4.3p per share while the special payout will be 25p per share.

READ: B&M European Value Retail raises profit forecast again as lockdown surge continues

The basic homewares retailer said the new coronavirus (COVID-19) lockdown measures currently in force across the UK and France may hinder trading during the peak Christmas season, however, it said it is well-positioned to respond to the new realities. 

The budget shop chain focuses on everyday essentials such as food, personal care and household care products, while it has a large network of out of town stores which have been preferred by consumers compared to city centre locations during the pandemic.

It has been allowed to operate as an essential retailer throughout lockdowns.

Sales growth in the UK fascia is expected to moderate over the second half, the group said, but so far in the third quarter has been at a similar level to the first half.

Half of the company’s French portfolio remains open, though it is experiencing a significant drop in footfall and it remains unclear what level of lost revenue recovery can be achieved as December peak trading approaches.

In the 26 weeks to September 26, 2020, B&M’s total revenue climbed by 25% to £2.2bn, while statutory profit before tax rocketed 122% to £235mln thanks to higher margins as a result of higher participation of non-grocery sales, strong sell-through across ranges and operational leverage in the UK.

Net debt was £325mln at the period end, including £438mln of cash.

“This is a very strong update with little of sign of momentum slowing at this stage heading into the key Christmas season,” analysts at Liberum commented.

“The combination of B&M’s structurally favourable position in the UK discounter space, continued very strong trading momentum, growth and upgrade potential and yield is very attractive.”

–Adds analyst comment–

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