B&M shares hit record lows following weaker-than-expected topline growth

Shares in discount retailer B&M European Value Retail were down double-digits early on Tuesday after it posted weaker-than-expected topline growth in Q1, despite weak comparatives and favourable weather conditions.

Group revenues were up 4.4% at £1.41bn, missing estimates of £1.43bn, with UK revenue growing 4.7% to £1.13bn and French revenues improving 7.6% to £136.0m. Revenue in its Heron Foods arm was down 0.4% at £138.0m.

B&M said it had delivered a "positive" like-for-like trading performance in the three months ended 28 June, with revenues improving in both its UK and French operations.UK like-for-like sales were up 1.3%, driven by a "good performance" in April from its general merchandise outdoor ranges, assisted by drier weather and the timing of the Easter break. B&M France LFL sales were up 1.1%.

B&M also noted that ASP deflation had led to a lower trading gross margin year-on-year in some general merchandise categories during Q1. However, it noted that from Q2, it will begin to annualise these ASP effects and new ranges being introduced will now have a higher bought-in trading gross margin.

"We expect a neutral to slightly negative reaction given trading is weaker than expected on an easier comparative basis and despite good weather, albeit shares are -22% since the full year results," said Citi analyst Vandita Sood, who also noted that UK sales were 3% below consensus.

As of 0830 BST, B&M shares were down 12.43% at 225.66p.

Reporting by Iain Gilbert at Sharecast.com