Investors look to future as B&M prepares to announce results

Investors will be looking for any forward-looking forecasts that they hope can lift B&M’s ailing shares as it reports its full-year results next week.

The recently announced departure of the company’s long-term chief executive and his family’s reduction of their shares in the firm have weighed on shares.

It has meant that B&M, which is a budget retailer, has not seen the uplift on the market that some might have expected during the cost of living crisis.

Shareholders will be hopeful that the company can benefit from tightening belts as customers choose lower-priced alternatives to their usual shopping habits.

Shares are down by over a quarter compared to last year, said AJ Bell investment director Russ Mould.

He said that the Arora family’s decision to sell 4% of the company’s shares and drop their stake to 7% might have “stoked a little unease amongst shareholders”.

“Then came the announcement in April that Simon Arora that he would quit as the company’s chief executive in spring 2023 after what will then be 18 years in the job,” he said.

He also pointed to poor showings for US retail shares, and worried that people might stop spending altogether instead of choosing cheaper alternatives are likely weighing on shares.

“Either way, investors have shrugged aside January’s positive trading update … This raises the stakes for the full-year results and also any guidance that the company feels able to give for the year to March 2023,” Mr Mould said.

The Arora brothers, Simon and Bobby, took over the struggling local supermarket chain in 2004 and transformed it into an international business listed on the FTSE 100.

The company had been founded in 1978, but it was not until the brothers built it into a discount retailer that it truly took off.

It now has 1,100 shops in the UK and France.

The company has come under criticism during the pandemic for claiming business rates relief and furlough money despite being open because it was an essential retailer.

The money was paid back, but not before the Aroras’ family trust had received a £100 million dividend payout.

Hargreaves Lansdown equity analyst Sophie Lund-Yates said: “The market hasn’t reacted kindly to the news that B&M’s CEO is stepping down.

“While a changing of the guard can cause markets to wobble at the best of times, some of the negative sentiment stems from nervousness around B&M’s path from here.

“One of the biggest things to watch next week will be the outlook statement.

“B&M’s core customers are likely among the worst affected by inflation.

“The group’s lower prices are also not as competitive as they once were, according to analysts.

“That means it’s less likely to capture more affluent customers looking for value options, too.”