B&M Europe Reports Strong First Half, Margin Growth
B&M European Value Retail reported a strong first half performance, with group revenue increasing by 3.6% to £2,848 million, and a notable 67 basis point expansion in gross margin to 37.2%. The results, released November 12, demonstrate the positive impact of the company’s ‘Back to B&M Basics’ strategy, which focuses on pricing, product availability, and promotional effectiveness.
The gains were broad-based, with like-for-like sales growth achieved across all three business segments: B&M UK, B&M France, and Heron Foods. B&M UK, the largest segment, saw total sales grow 2.4%, with a modest 0.4% increase in like-for-like sales. More significantly, Q2 saw a 3.2% LFL growth, driven by General Merchandise. B&M France delivered a strong 13.7% total sales increase, fueled by a 5.9% LFL growth. Heron Foods also contributed, with total sales up 3.0% and LFL growth of 2.9%. This widespread positive performance highlights the resilience of B&M’s value proposition in a challenging economic environment.
The margin improvement is particularly noteworthy. The 67 basis point increase in group gross margin, driven by trading gross margin recovery in B&M UK, translated into a 6.0% increase in adjusted EBITDA to £203 million, and a 16.6% jump in adjusted profit before tax to £121 million. This profitability boost, coupled with strong cash generation—post-tax free cash flow rose to £132 million—has allowed the company to reduce net debt leverage to 1.3x adjusted EBITDA, improving its financial flexibility.
The company is maintaining a cautious outlook, introducing FY27 guidance for adjusted EBITDA in the range of £450m-£500m, versus £459m in FY26. This suggests a continuation of modest growth, underpinned by the ongoing execution of its strategic initiatives, including store refits and format innovations. The interim dividend of 3.6p per share, payable December 18, reflects the improved financial performance and provides a modest return to shareholders. The results suggest a company successfully navigating current economic headwinds through a focus on value and operational efficiency.