There are two ways of looking at B&M European Value Retail’s tilt towards discount shopping. One, that selling cheaper products than mainstream rivals will allow the retailer to hold, or even gain, market share, or two, a lower income customer base is squeezed more tightly by the rising cost of living and causes sales to contract.
The market has already made up its mind on which is more probable. At just over ten times forward earnings, the shares are about as pessimistically priced as they have been since the retailer was floated on the market in 2014. Despite the first-quarter sales decline being less severe than expected, investors are right to be cautious.
For the core B&M UK business, revenue fell by 1.6 per cent
