Discount retailer B&M hit by weak UK gardening season, shares fall

By Yamini Kalia and Atharva Singh

July 15 (Reuters) - Discount retailer B&M on Wednesday reported a 2.3% decline in first-quarter like-for-like sales in its core UK market, as a slow start to the gardening season weighed on trading though growth in France helped lift group revenue.

Shares in the company, which sells products ranging from food and household essentials to toys and garden items, fell 6.5% to 190.8 pence by 0928 GMT. They have risen around 14% so far this year.

One of Britain's largest discount retailers, B&M has long been regarded as a key beneficiary when household budgets come under pressure.

However, the weak performance in the quarter ended June 27 underscores the challenge facing CEO Tjeerd Jegen as he pushes his "Back to B&M Basics" turnaround plan to rebuild profitability at a retailer that has struggled amid stiff competition, particularly from supermarket loyalty schemes.

Investors are disappointed that B&M's UK recovery is taking longer than expected and that a heatwave-driven boost to sales has yet to materialise, said Goodbody Stockbrokers analyst Fintan Ryan.

Jegen, who cut prices to clear old inventory, said B&M's general merchandise categories returned to growth in May and June, while garden and outdoor product inventories ended the season at normal stock levels.

B&M's UK grocery margins also remained under pressure, but general merchandise margins improved and are expected to continue rising as the retailer rolls out autumn and winter ranges.

Investors are likely to give B&M the rest of 2026 to deliver on its turnaround plan, provided cash generation remains consistent. However, sustained like-for-like sales growth and meaningful profit growth will need to emerge in fiscal 2028 to restore confidence, Ryan added.

Group revenue rose 2% to £1.43 billion ($1.92 billion) in the quarter, with France recording 14.6% revenue growth and like-for-like sales growth of 5.3%.

($1 = 0.7458 pounds)

(Reporting by Atharva Singh and Yamini Kalia in Bengaluru. Editing by Mark Potter)