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CORRECTED-UPDATE 1-Discount retailer B&M's holiday sales soar, to pay special dividend

(Corrects paragraph 5 on profit forecast, adds paragraph 7 to clarify previous guidance)

Jan 7 (Reuters) - British discount retailer B&M reported on Thursday a 22.5% jump in holiday quarter sales and announced a special dividend, as it benefited from low prices and stores that remained open during lockdowns.

The retailer’s out-of-town stores have struck a chord with consumers during the COVID-19 pandemic and its stores have been allowed to stay open through the restrictions because they also sell food.

Third-quarter sales rose to 1.40 billion pounds, from 1.14 billion pounds a year earlier.

The retailer, however, flagged uncertainties ahead as Britain headed into a fresh lockdown to fight a new variant of the novel coronavirus.

B&M narrowed its adjusted core profit forecast to a range of 540 million pounds to 570 million pounds for the year ending March 27, after it let go of 80 million pounds ($109 million) of property tax relief offered by the UK government in early December.

The move followed a similar decision by major supermarket groups after criticism from lawmakers and media for paying dividends while receiving the relief.

B&M said in December it expected core profit of 600-650 million pounds, but that figure did not include the impact of the 80 million pound business rate payment.

B&M said it would pay a special dividend of 20 pence per share, worth about 200 million pounds in total, towards the end of this month. ($1 = 0.7361 pounds) (Reporting by Pushkala Aripaka in Bengaluru, Editing by Sherry Jacob-Phillips, Sriraj Kalluvila and Keith Weir)

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