B&M shares are at record lows! Is now the time to consider buying?

A recent plunge in Barratt shares has attracted loads of investor consideration on Tuesday (15 July). But it surely’s not the one FTSE 350 share sinking proper now — B&M European Worth Retail (LSE:BME) shares have additionally plummeted, reflecting a cold buying and selling replace of its personal.

At 235.8p per share, the B&M share value was final buying and selling 8.5% decrease. It touched all-time lows of 221.4p earlier within the session.

The share hasn’t been capable of stem a tide of disappointing gross sales updates during the last 12-18 months. And whereas it’s averted issuing a revenue warning on this event, revenues proceed to path dealer expectations.

However with new management now in place, is it time to contemplate shopping for cut-price B&M shares?

B&M’s gross sales disappoint

Trying on the brilliant facet, like-for-like gross sales have flipped again into optimistic territory after latest declines, at the moment’s replace confirmed.

At B&M UK — a unit chargeable for 80% of the corporate’s high line — like-for-like revenues rose 1.3% within the 13 weeks to twenty-eight June. This was “pushed by a superb efficiency in April from our Basic Merchandise outside ranges assisted by drier climate and Easter timing“, the corporate mentioned.

But B&M UK’s like-for-like gross sales progress was round half of what brokers had been predicting. And what’s extra, progress must be considered within the context of weak comparables a yr earlier. Gross sales within the corresponding 2024 quarter dropped 5% (or 3.5%, stripping out the Easter timing impact).

Margin pressures increase turnaround issues

B&M’s buying and selling replace has left traders fearing how unhealthy gross sales would have been had it not been for the latest heatwave.

Extra particularly, it’s raised questions over the corporate’s turnaround technique for its fast-moving shopper items (FMCG) traces, the place like-for-like gross sales at B&M UK had been destructive final quarter.

Basic Merchandise gross sales had been up on each a like-for-like and headline foundation. Nonetheless, common promoting costs (ASP) for its backyard, toys, and DIY traces endured additional deflation, pushing gross margins decrease year-on-year for some merchandise.

A threat too far?

B&M’s first quarter has been a tricky one for brand spanking new chief government Tjeerd Jegen, who arrived final month.

In concept, worth retailers like this needs to be thriving when shoppers really feel the pinch. However firms throughout the low cost phase are struggling amid the enduring cost-of-living disaster. Thus far, B&M doesn’t appear to have bought a deal with on tips on how to flip issues round. The dearth of a web-based channel in what’s a extremely aggressive market can also be hampering its progress.

The corporate’s maintained earnings forecasts for the complete yr regardless of its disappointing Q1. Adjusted EBITDA is tipped at £569m-£646m, in contrast with £620m final yr. I concern a recent downgrade is barely a matter of time, although, and that the retailer’s troubles may endure.

Traders will likely be hoping new CEO Jegen will begin pulling rabbits out of hats quickly. Earlier management positions at heavyweight retailers like Tesco might assist him conjure up the mandatory magic to reinvigorate gross sales.

However I can’t assist however really feel the dangers of investing right here stay too excessive. On steadiness, traders ought to take into account concentrating on different UK shares, for my part.