Should you buy shares in B&M European Value Retail?

The rise of B&M European Value Retail has been phenomenal: from a single discount shop in Blackpool in the 1970s to a FTSE 100 business today. But investors are losing faith in its long growth story, with the shares shedding more than a quarter of their value in the past year.
B&M, which also owns the B&M France and Heron Foods chains, was founded in 1978. It was a loss-making retailer with just 21 shops when brothers Bobby and Simon Arora struck a deal to acquire the business from Phildrew Investments in December 2004. They bought it for £525,000 — two decades later the company has a market capitalisation of just over £4 billion.
B&M sells a huge range of products, including long-life groceries, homeware, toys and DIY tools, at very low prices. It has expanded massively in the past decade, alongside the growing power and influence of other discount retailers such as Aldi and Lidl. The group has 715 B&M shops and Heron Foods stores in Britain, and 124 B&M branded shops in France.
Its growth has faltered recently, with the shares in decline and short interest — which represents investors betting against the business — building up to about 2 per cent of the stock.
As cost of living pressures have eased, so spending at discounters has fallen back. Aldi and Lidl have struggled to maintain their pace of market growth, and investors are bracing for a slowdown at B&M. Over the mid-term, City analysts expect like-for-like sales growth at B&M’s UK shops to settle at about 2 per cent over the next few years, compared with a historic rate of 4 per cent. But visibility remains poor — even though B&M recorded its highest adjusted cash profit of £629 million on £5.5 billion in sales in its 2024 financial year, it failed to provide any formal guidance for next year.
Like-for-like sales may not be so important for the group’s long-term growth ambitions. B&M has been expanding its physical presence at an impressive rate: it has doubled its UK store count in the past decade and this year increased its mid-term target from 950 to at least 1,200.
These stores are quick to open and profitable too — enabling the company to dish out generous shareholder returns. Over the course of 2020 to 2024, B&M paid back ordinary and special dividends of £1.8 billion, more than 30 per cent of its current market capitalisation.
While growth has slowed, B&M has been able to hold on to its gains from the pandemic. Average revenue per store is £1.2 million higher than before the pandemic, according to analysis by the broker Panmure Liberum. Overall revenue is £1.7 billion higher than in its 2020 financial year, but inventory is only £188 million higher.
Recent weak trading has unnerved some investors. Like-for-like UK sales in the first quarter of its 2025 financial year slipped by 4 per cent, though this was slightly stronger than some of its peers. Argos, for example, reported a 6 per cent drop in sales for its quarter ending in June, and at Poundland, the discounter owned by the Polish group Pepco, sales dropped 7 per cent.
The main risk to B&M’s shares is the continued tough consumer backdrop. The group’s focus on value means that it is well positioned, but this will not stop shoppers from limiting their overall spend if they are feeling the pinch. There has been a brutal period of adjustment as the market digests B&M normalising to a lower level of growth, but a continued tight focus on stock — with the company flagging that there was no markdown risk for the spring/summer season — should see it through this strained period for the sector.
Advice Hold
Why Growth maturing but still strong quality
Wickes, the home improvement retailer, is at the mercy of the cyclicality of the house renovation market. This year pre-tax profits are expected to come in 22 per cent lower than last year. But early signs of a revival in demand and a 6.6 per cent dividend yield may be enough for some investors to take a closer look.
Wickes, which can trace its heritage back to 1854 but started trading formally in the UK in the 1970s, uses a traditional DIY store model to sell to trade customers. It became the first fixed-price builders’ merchants in the UK and now its customers include both tradesmen and amateur DIYers. The company was spun off and separated from Travis Perkins through a premium listing on the London Stock Exchange in 2021.
Business boomed during the pandemic, but the home improvement sector has been in decline for the past two years, as higher mortgage rates have eaten into household bills and put a damper on demand for renovations. But recent numbers suggest the company has emerged from the depths of the cycle: retail like-for-like sales nudged up 0.6 per cent in the first half of the year. Its design and installation showroom business is still struggling, with sales dropping by 17 per cent, but this looks like it could be stabilising.
The group acquired the solar panel company Solar Fast in May, which could help support growth as more renovation projects have sustainability and energy conservation targets.
Shares in Wickes have rallied by 28 per cent in the past year, though still trade at a relatively undemanding price to earnings ratio of 12.9, compared with the B&Q owner Kingfisher, which trades at a multiple of 14.9. Wickes’s dividend yield alone may catch the eye of an income investor, forecast at 6.7 per cent over the next 12 months, according to estimates compiled by FactSet. Still, given it is still early days in what could be a recovery story in the home renovation market, with consumers still holding off on bigger ticket purchases, investors may be minded to hold off from buying the shares.
Advice Hold
Why Still early days in sector recovery