Discount chain B&M has warned over profits once again after seeing sales come under pressure and slashing prices as it continues with overhaul efforts.
The group said UK like-for-like sales fell 0.6% over the all-important quarter to December 27, although it saw an “encouraging” 3% rise in December and said growth had continued into January.
The group cut its full-year underlying earnings outlook for the third time since last October, to between £440 million to £475 million, down from the previous guidance of £470 million to £520 million.
This would mark a hefty drop on the £620 million underlying earnings reported for the year to March 29 2025.
Shares in B&M fell as much as 5% at one stage in morning trading on Thursday, before settling more than 1% 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% 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.”
