B&M European Value Retail S.A. posted a dip in UK sales as the pandemic-induced demand is slowing down after the end of COVID-19 restrictions.
The budget retailer is up against strong numbers from last year, with group underlying earnings (EBITDA) declining despite the strong UK gross margin.
READ: B&M hikes profit forecasts after limited end-of-season markdowns
The FTSE 100 group remained bullish on its outlook and said inventory levels and in-store availability remain good despite worldwide supply chain issues.
Full-year gross margin depends on how the peak Christmas period will play out.
Five of the 45 new UK stores due to open in the current financial year may be delayed to the following period, while the Heron Foods business remains on track to open 15 new sites.
In the 26 weeks to 25 September, group revenues rose 1% to GBP2.2bn but UK like-for-like dropped 5%.
Group adjusted EBITDA dipped to GBP282mln from GBP295mln last year due to the charge of business rates. The dividend was hiked 16% to 5p per share.
Gross margin in the B&M UK business was particularly strong, driven by a change in the sales mix towards general merchandise and high sell-through across Spring/Summer seasonal ranges leading to limited markdown activity.
There were more challenging trading conditions in Heron Foods as average transaction values for grocery shopping normalise to pre-pandemic levels.
Shares shed 6% to 602.67p on Thursday morning.
