Discount retailer B&M has issued a fresh profit warning, attributing the revised outlook to ongoing sales pressure and strategic price reductions implemented as part of its overhaul efforts.
The group reported a 0.6 per cent decline in UK like-for-like sales during the crucial quarter ending 27 December.
However, it noted an “encouraging” 3 per cent increase in December, with this positive momentum extending into January.
This marks the third time since October that B&M has lowered its full-year underlying earnings forecast, now projecting between £440 million and £475 million.
This is a significant reduction from its earlier guidance of £470 million to £520 million and represents a substantial decrease from the £620 million in underlying earnings reported for the year to 29 March, 2025.
Following the announcement, B&M’s shares initially dropped by as much as 5 per cent in morning trading on Thursday, before recovering slightly to close more than 1 per cent down.
B&M said: “The downward movement in range is driven by ongoing investments in pricing and clearance, improvements in stock quality and the financial underperformance of Heron Foods, where we continue to review and reposition our customer offer.”
Sales in Heron Foods fell 0.1 per cent over the latest quarter.
B&M said it ramped up efforts to reduce unwanted stock through hefty discounts and was “confident the actions we are taking can restore sustainable like-for-like growth at B&M UK over the next 12 to 18 months”.
The group’s “back to basics” plan launched last October has seen it sharpen its price offer, including price reductions across the board, while it has also significantly reduced its product range in numerous categories amid efforts to simplify its operations and reduce costs.
As well as trading pressure, it was also knocked last October by an accounting blunder after it failed to properly account for an extra £7 million in overseas freight costs, which saw it lower annual earnings guidance.
The group said on Thursday its investigation into the incident was now complete, adding the “implementation of the report’s recommendations on specific IT and financial operational processes is under way”.
Tjeerd Jegen, who was appointed chief executive last year, said: “As we progress ‘Back to B&M Basics’, we are identifying opportunities to make deeper investments in clearing discontinued lines.
“As with our pricing actions, these are investments in the long-term strength of B&M, but they do impact near-term financial performance.
“As a result, we are revising our full-year guidance downwards to reflect these actions and the financial underperformance at Heron.”
