MARKET REPORT: Shareholders cheer B&M profits surprise

The FTSE 100 risers were topped by B&M after the bargain retailer hiked its half-year forecasts in a surprise update.

The chain, which has over 600 stores in the UK selling everything from wallpaper to vacuum cleaners, said profit margins had been stronger than originally predicted, thanks partially to lower levels of discounting, while sales were broadly in line with expectations.

As a result, it expects to earnings of between £275million-£285million for the six months to September 25, higher than the £235million predicted by analysts.

Surprise update:  B&M, which has over 600 stores in the UK said that profit margins had been stronger than originally predicted, thanks partially to lower levels of discounting

B&M also said it is ‘well positioned’ for the upcoming ‘golden quarter’, the final three months of the year when retailers usually make most of their profits in the run-up to Christmas.

However, it also warned that trading and customer demand remained ‘highly uncertain’. Analysts at Peel Hunt said B&M may have benefited from its reputation as an essential retailer last year, boosting customer loyalty.

The broker added that B&M’s decision to order Christmas stock two to three weeks earlier than usual ‘may prove a masterstroke’ and shield it from shortages caused by supply chain issues.

‘This is especially important in lines such as toys: any sniff that they are in short supply could mean a bit of a run on stock, so being loaded with product is surely the right strategy,’ Peel Hunt said. B&M jumped 6.9 per cent, or 37.4p, to 578p.

Stock Watch – Somero Enterprises

MARKET REPORT: Shareholders cheer B&M profits surprise

Somero Enterprises, a maker of machines that flatten floors, hiked its full-year guidance after a record-breaking first half.

The AIM-listed firm reported that profits in the six months to the end of June had rocketed 213 per cent to £17million, while revenues surged 82 per cent to £47million. The interim dividend was also raised 125 per cent to 7p per share.

Somero said its US business had benefited from accelerated activity as its customers worked to catch up on building projects slowed down by the Covid-19 pandemic.

Shares in the group jumped 15.7 per cent, or 74p, to 544p.

But the FTSE 100 had a lacklustre session, falling 0.75 per cent, or 53.84 points, to 7095.53, while the FTSE 250 dropped 1.03 per cent, or 248.59 points, to 23,848.89.

Investors fretted that the Delta variant of Covid-19 is hurting the global economic recovery following subdued property and car sales data from China.

Oil prices were also in focus as crude producers struggled to restart operations in the Gulf of Mexico following the devastation of Hurricane Ida. Brent crude rose 1pc to $72.59 a barrel, while shares in BP fell 0.1 per cent, or 0.15p, to 298.25p and Royal Dutch Shell was up 0.2 per cent, or 3.2p, at 1437.4p.

Avon Protection, which makes oxygen masks and armour for the military, police and fire brigades, climbed 1.4 per cent, or 24p, to 1800p as it unveiled a contract with the US Army for a new type of helmet.

Fellow FTSE 250 constituent Airtel Africa also rose 0.9 per cent, or 0.85p, to 93.65p following a target price hike from analysts at UBS.

Accesso Group, a provider of electronic ticketing technology to theme parks, museums and venues, shot up 14.7 per cent, or 122p, to 950p after raising full-year guidance on the back of ‘very strong trading’ over the summer.

Small-cap property firm U+I Group climbed 6.9 per cent, or 5.6p, to 86.6p after it secured planning permission for its £770million Morden Wharf project in London. 

Medical imaging group Ixico was up 2.2 per cent, or 1.7p, at 80.7p after it inked a contract to support the clinical trial for a potential therapy for multiple system atrophy, which damages the brain’s nerve cells.

And estate agent M Winkworth rose 9 per cent, or 17p, to 207p after reporting a 330 per cent rise in profits to nearly £2million in the six months to the end of June. The period was marked by ‘an exceptional level of sales activity’.

In the fallers, shares in AIM miner Pan African Resources headed underground, tumbling 5.1 per cent, or 0.86p, to 16p after the group warned its taxes for the year to the end of June had soared by 281 per cent to $30million.

Glasses retailer Inspecs dropped 1.3 per cent, or 5p, to 395p after a set of half-year results that saw its losses narrow by nearly 69 per cent to $2.6million in the six months to the end of June failed to excite investors.

Oiler Jadestone Energy sank 2.5 per cent, or 2p, to 78p after it extended the deadline for its acquisition of a majority stake in an oil field in New Zealand.

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