- B&M European Value Retail S.A. (DI)
- 03 June 2020 14:55:06
Source: Sharecast
B&M has put in a resilient performance during the Covid-19 crisis with strong ambient food sales when households were stocking up and good sales of gardening and DIY goods as restrictions were eased, Jefferies said.
This performance has been rewarded by a rerating of B&M shares when rivals have suffered major downgrades. This will be borne out at the company's results on 11 June but superior earnings delivery will be harder to maintain, Jefferies said.
B&M's seasonal non-food products will be less in demand from July and its lack of online food sales, combined with consumers consolidating their shopping, has made its proposition less attractive, Jefferies said. The broker reduced its rating from 'buy and stuck to its 410p price target for the shares.
Whilst remaining clearly enthused by B&M's longer-term prospects, we see a weakening of UK consumer footfall into discount food offerings as a potential ST [short-term] unknown once the relevance of B&M's seasonal nonfood offering subsides," Jefferies analyst James Grzinic wrote in a note to clients. "Relative valuations near peaks prevent material short-term upside from here, with more balanced footfall trends likely to prevail in the weeks ahead."
