Business is booming at cut-price variety retailer B&M European Value Retail (BME), so much so that boss Simon Arora has upgraded his UK store number target for the Sir Terry Leahy-chaired concern.

Helping shoppers spend less at a time when retail prices are on the rise, the discounter is set fair for current economic uncertainty and plugged into the structural shift towards value, although B&M’s valuation leaves scant room for disappointment.

Impressive full year results (25 May) from the soft drinks-to-garden furniture seller highlighted a 25.6% hike in profit before tax to a better-than-expected £190.1m. Strong like-for-like growth and an excellent start to 2018 have encouraged CEO Arora to upgrade the UK store target from 850 to ‘at least’ 950. ‘Still under-represented in large areas of the UK’, B&M has many years of growth ahead and its competitive prices are chiming with consumers hungry for value.

B&M is an exciting earnings and dividend growth story, although the valuation is rather fulsome. For the year to March 2018 Numis Securities forecasts a taxable profits push to £218m for earnings per share of 17.2p (2017: 14.8p), leaving B&M swapping hands for more than 21 times forward earnings.

High-flying B&M’s booming but at 368p, investors have to pay up to access its growth. (JC)

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