Discount retailer B&M (LSE:BME) saw its shares continue to fall after it released FY22 interim results at the end of last month. Let’s take a closer look at the results. I want to decide if I should buy further shares or hold my current position.
B&M shares continue to fall
The current cost of living crisis has increased the popularity of discount retailers. Such retailers help consumers get more bang for their buck.
B&M’s rise to prominence has been remarkable, in my opinion. It is one of the best known discount retailers on the British high street. It currently serves nearly 4m customers through its 700-strong store network.
So what’s been happening with the B&M share price? Well, as I write, the shares are trading for 350p. At this time last year, the shares were trading for 550p, which is a 36% drop over a 12-month period.
When FY results were announced on 31 May 2022, B&M shares dipped close to 15%! I own shares in B&M and purchased some shares a few months ago. I’m a fan of the business but understand that these results and macroeconomic headwinds have put pressure on the shares. Is now a time to add further cheap shares or should I just hold my position?
FY results explained
So let’s take a look at B&M’s results. It is fair to say there were a tad disappointing overall and have negatively affected B&M shares.
Firstly, B&M reported that group revenue decreased by nearly 3% compared to 2021 figures. Revenue did increase by 22% compared to 2020 levels, however. Next, profit levels remained constant at £525 compared to last year, which is disappointing for me.
B&M said that cash generation dropped and, due to the aforementioned financial issues, earnings per share and the dividend also fell compared to last year.
On a positive note, B&M did open 34 new stores in the fiscal year offset by 14 closures and relocations. It also reported a positive uptick in trading in its France-based stores.
Macroeconomic factors such as inflationary pressures, rising cost of materials and the supply chain crisis have placed pressure on B&M shares and many other retailers. I believe this explains the reason behind the shares falling and continuing to do so.
My position
With the current issues no doubt affecting profitability, B&M shares look a bargain. As I said, I’m a fan of the stock, which is why I added the shares to my holdings a few months ago.
Right now, I’m going to hold my position and if B&M sees its shares fall further, I will look to add more. Despite macroeconomic issues, the shares look good value for money on a price-to-earnings ratio of eight. Furthermore, the shares pay a dividend that would boost my passive income stream. It is worth remembering that dividends can be cancelled at any time, of course.
Many FTSE stocks have come under pressure in recent months, so I will look to diversify my holdings with other stocks and keep an eye on B&M shares for now.