B&M European Value Retail Q3 Earnings Call Highlights

B&M European Value Retail (LON:BME) used its FY2026 third-quarter trading update call to discuss a “soft start but a solid finish” to the golden quarter, outline progress on its “Back to B&M Basics” plan, and explain a reduction and tightening of full-year adjusted EBITDA guidance.

Q3 trading: slow start, stronger December

CEO Tjeerd Jegen said the company’s Q3 began with “negative low single digit” like-for-like (LFL) sales as customers faced heightened uncertainty. Performance improved materially in December, which he described as a turning point, with B&M UK delivering 3% LFL growth for the month. Jegen also highlighted that the December performance was balanced, with general merchandise and FMCG contributing “more or less equal” momentum.

He added that the positive LFL sales trend in the UK continued into January. Elsewhere in the group, France delivered positive LFL growth but at a lower rate than before due to strong comparatives, while store openings helped drive what Jegen called solid year-on-year growth of 8.5%. Heron Foods, however, underperformed management expectations and its underlying profitability “was not where it needed to be.”

FY26 guidance reduced as investments and Heron weigh on EBITDA

The company lowered and narrowed its FY26 adjusted EBITDA guidance range to £440 million to £475 million, from the previously stated £470 million to £520 million. Jegen said the change reflects year-to-date trading, the outlook for Q4, and three main drivers:

• Continued FMCG price investment: Management said it has kept investing in FMCG pricing since changes were introduced in August. The aim is to maintain pricing “significantly cheaper than the big grocers.” Jegen noted elevated competitive activity in December on certain seasonal lines and said B&M participated to remain compelling on value.
• Strategic clearance tied to range rationalization and stock “cleaning”: As B&M prepares for a rollout of SKU rationalization, it is increasing clearance activity in the second half, especially Q4. January is focused on clearing seasonal and discontinued lines, while March is expected to begin heavier clearance linked to items being removed as part of the range rationalization program.
• Heron Foods underperformance: Jegen said Heron’s results in FY26 have seen a “significant EBITDA underperformance versus our expectations” outlined in October, prompting a review of the customer proposition.

Jegen stressed that two of the three factors—FMCG price investment and clearance for range rationalization—are intentional decisions linked to “Back to B&M Basics” and the longer-term health of the business. He reiterated that restoring sustainable LFL growth in B&M UK remains the top priority and has previously been expected to take 12 to 18 months.

Despite the lower near-term profit outlook, management said it still believes B&M UK can return in the medium term to a low double-digit adjusted EBITDA margin business once sustainable LFL growth is re-established, emphasizing that “margin is an outcome, not a financial input.”

Back to B&M Basics: availability rollout and SKU rationalization progress

Management said it is moving from trials to rollouts across key workstreams, including availability, range rationalization, and promotions.

Availability trials: Jegen said the availability initiative scaled from 11 trial stores to 153 stores in December, despite December typically being a month when retailers avoid operational changes. The trial focuses on best sellers—moving toward 250 of the best-selling lines—with changes including more shelf space, a stronger focus on stock record accuracy, and leaving gaps visible when a supplier has not delivered to the distribution center (a new practice for B&M). He said the focused items in the 153 stores saw double-digit sales increases, though he cautioned that some gains may reflect substitution from other brands rather than purely incremental demand.

Based on the results, the company plans to roll out the new availability working practices for the 250 lines to all 791 UK stores in late January and early February. Jegen framed this as a starting point, noting there are “thousands of lines in FMCG” and that the scope could expand over time.

Range rationalization: B&M began pilots in three FMCG categories—pasta and rice, crisps and snacks, and wine—across about 23 stores, with SKU counts reduced by roughly 35% in those categories. Jegen said the goal is to remove “redundant choice, not unique choice,” simplifying shopping and reducing complexity-related costs while still meeting customer needs.

Four additional categories are expected to be added later in January, bringing the trial to seven categories in February. Management’s stated objective is a 25% to 35% range reduction while still achieving a low single-digit sales uplift in the rationalized categories. Jegen said pilots used transaction data and payment card identifiers to better understand item loyalty and switching behavior.

He said broader rollout across roughly 200 subcategories is intended to begin in April (the first quarter of the new financial year), aiming to complete most work by mid-summer, with seasonal categories updated later in the year.

Heron Foods: clearance supply constraints undermine model

Responding to analyst questions, Jegen provided more detail on Heron’s challenges. He said the business was built on a combination of convenience and a clearance model, sourcing discounted stocklots—often short-dated food products—at attractive economics for both customers and Heron’s margins.

However, he said suppliers have improved forecasting tools, reducing the volume of such clearance opportunities. As a result, Heron has shifted toward being “more or less now a convenience discount store,” which carries higher operating costs without the margin benefit that the clearance model historically provided. Management said it is conducting a review of the customer proposition and will continue to assess the business.

EY freight review completed; leverage range reiterated

Jegen said EY completed the review commissioned by the board related to a freight issue previously disclosed. The review covered accounting and IT aspects, and the company is implementing recommendations focused on formalizing policies and procedures, standardizing business-as-usual IT changes, improving cross-functional partnering, and strengthening segregation of duties. Management said the full-year impact of the issue remains unchanged versus the October announcement, and it did not indicate significant CapEx requirements for the remediation.

On balance sheet considerations, Jegen reiterated the company’s capital allocation policy and said it aims to stay within a 1.0x to 1.5x leverage range, noting leverage was 1.6x at the half year. He also confirmed there was no change to store opening expectations, with B&M still on track to open 40 to 45 gross new stores in FY26.

About B&M European Value Retail (LON:BME)

B&M European Value Retail SA operates general merchandise and grocery stores. The company operates a chain of stores under the B&M, Heron Foods, and B&M Express in the United Kingdom; and stores under the B&M brand in France. It also provides property management services. The company was founded in 1978 and is based in Munsbach, Luxembourg.