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Today, the long-term investing case for
B&1000 European Value Retail SA (LSE:BME) shares is put under the microscope by two Fools with opposing stances…
Bullish: James J. McCombie
B&M is a discount retailer that has grown apace. Given that the United kingdom’due south living standards are expected to fall significantly over the adjacent two years, I — unfortunately — expect it and its shares to perform well going forward. The latest trading update was positive, and management is confident of making the virtually of the run-upward to Christmas.
The company will face pressures to go along costs low and deal with cost inflation simultaneously in the brusque run. Simply information technology does have good relationships with its manufacturing supply base in Asia, and with 1,018 stores in the UK, it holds a ascendant position.
A quick visit to the company’s website reveals hundreds of vacancies advertised within the terminal month. There is a pipeline of new stores, and a new, widely experienced CEO has come in to take the reins from the founder who guided B&M through its early on, rapid expansion.
Bearish: Ben McPoland
Soaring inflation should be advantageous to a retailer with the word “value” in its name. Shoppers should be flocking to the stores of B&M European Value Retail.
In theory, that is. In practice, growth has slowed, with this twelvemonth’south H1 results showing meagre one.8% sales growth twelvemonth over year. Its adjusted earnings per share (EPS) effigy was down 23% over last year.
B&Thousand is facing the aforementioned rising input costs as every other retailer. Its margins are beingness squeezed. Yet the firm can’t raise prices also much without losing its value proposition. I’thou sceptical that a combination of ascent costs and depression growth will result in great shareholder returns.
Besides, primary executive Simon Arora announced this year he was stepping down after 17 years in charge. Perchance new leadership will reignite growth. Or maybe non. There’s just besides much uncertainty for me to buy shares right now.
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