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Investing.com -- Shares of B&M European Value Retail (LON:BMEB) fell more than 10% on Tuesday after the retailer reported weaker-than-expected sales for the first quarter, despite favorable weather and Easter timing that supported seasonal categories.
Like-for-like sales in the B&M U.K. segment rose 1.3% for the 13 weeks ended June 28, falling short of market expectations of 2.6%.
Two-year like-for-like sales declined 3.8%, down from a 0.5% increase in the previous quarter.
The company said performance was boosted by strength in general merchandise categories such as Garden, Toys and DIY.
Group revenue rose 4.4% year-over-year to £1.41 billion, with B&M U.K. contributing £1.13 billion, up 4.7%.
B&M France reported revenue of £136 million, a 7.6% increase, while Heron Foods posted a 0.4% decline to £138 million.
In B&M U.K., sales volumes and values in general merchandise increased on both a like-for-like and total basis.
However, average selling price deflation in the category led to a year-over-year decline in trading gross margin.
The company said it expects these effects to annualize from the second quarter as higher-margin ranges are introduced.
Like-for-like sales in fast-moving consumer goods were negative during the quarter. B&M said Health & Beauty and Cleaning categories improved in June after operational adjustments, though it noted that work to strengthen the broader FMCG proposition is continuing.
The company opened 18 gross new stores in the U.K. during the quarter, resulting in 10 net additions. It remains on track to open 45 gross stores this fiscal year.
In France, like-for-like sales increased 1.1%, with four new stores added. Heron Foods, which remained profitable, opened two gross stores with one net addition.
Chief executive Tjeerd Jegen said there is a significant opportunity to improve execution.
“While B&M UK’s like-for-like sales are growing, I see a significant opportunity and requirement to sharpen our commercial and operational execution as we move towards and beyond the Golden Quarter,” Jegen said in a statement.
The company said operations have commenced at its new import center in Ellesmere Port, and preparations are under way to relocate the Middlewich distribution center ahead of a lease expiry in August 2026. The redomicile process remains on track for completion within the calendar year.