By James Davey
LONDON (Reuters) -British discount retailer B&M kept its financial guidance for this year, saying trading had been good in the first weeks of the key Christmas quarter as shoppers look for savings amid a cost-of-living squeeze.
With inflation at a 40-year high of 10.1% and consumer confidence close to the gloomiest on record, Britons are cutting back and planning less spending this Christmas.
However, the FTSE-100 group, which sells everything from household goods to toys, do-it-yourself products and food, said on Thursday like-for-like sales in its main UK business were up 2.5% in the first six weeks of the so called "Golden Quarter".
That included strong sales of non-grocery categories, where shoppers typically focus any cutbacks.
In recessionary times, discount operators tend to do relatively better than mainstream peers as they have lower cost bases and shoppers become more price sensitive.
In food retailing Aldi UK and Lidl GB are currently Britain's fastest growing operators, while in air travel Ryanair is outperforming rivals.
"Sales momentum is good as we enter a difficult period for the economy and consumers," said Chief Executive Alex Russo.
"Our value-based approach is winning with existing and new customers, and we will do our very best to help them weather the cost-of-living crisis."
B&M, with over 1,100 stores across the United Kingdom and France, is currently selling a Lynx deodorant and shower gel set for 2.99 pounds ($3.41) and a 382 gram pouch of Quality Street chocolates for 3 pounds.
But despite its confidence, B&M's shares fell over 5% in morning deals, with analysts fearing a potential need for heightened discounting.
B&M said it still expected core earnings (adjusted EBITDA) for 2022-23 to be in a range of 550 million to 600 million pounds, down from the 619 million pounds made in 2021-22.
It made core earnings of 232 million pounds in the six months to Sept. 24, down 17.9%, on revenue up 1.8% to 2.31 billion pounds. B&M performed well during the pandemic making year-on-year comparatives tough.
($1 = 0.8781 pounds)
(Reporting by James DaveyEditing by Sarah Young and Mark Potter)