B&M set to slash prices following profit warning

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Budget retailer B&M has issued a profit warning for the year, attributing the downturn to sliding UK sales and soaring operational costs.

The group reported a worse-than-expected 1.1 per cent drop in UK like-for-like sales during its second quarter, projecting half-year underlying earnings to plummet by 28 per cent to approximately £198m.

This financial pressure follows a significant £30m surge in wage costs in the first half, ending 27 September, compounded by a £14m packaging tax under new Extended Producer Responsibility rules.

Consequently, B&M now anticipates full-year underlying earnings to fall between £510m and £560m, representing a potential 18 per cent decline from the previous year.

The company stated it is taking “decisive actions” to bolster its flagging performance, though it cautioned these measures could take up to 18 months to materialise.

B&M expressed confidence that these steps “will restore B&M’s value proposition and support a return to sustainable like-for-like sales growth for B&M UK.”

Budget retailer B&M said UK like-for-like sales dropped by a worse-than-expected 1.1 per cent in its second quarter, with the group now forecasting half-year underlying earnings will tumble by 28 per cent to around £198 million

Turnaround measures include cutting prices of some of its key value items, bringing in more flexible “managers specials” promotions, refocusing and cutting the number of ranges it has and improving availability of its most popular products on shelves.

Recently appointed chief executive Tjeerd Jegen said: “Since becoming CEO in June, I have led the business through a comprehensive review of our customer proposition and operations.

“We have concluded that while B&M’s value proposition remains strong, our operational execution has been weak.

“This has impacted our first-half trading performance, and this is reflected in the full-year outlook.”

He added: “We have already sharpened our price position, and we are moving with pace to refocus our ranges, improve on-shelf availability and bring back excitement to our stores.

“We have more work to do, but we are confident these changes will restore consistent like-for-like sales growth over time.”

While the group said it had seen an improvement in UK like-for-like sales since the second quarter, it still expects trading to be impacted over the final six months, with a range of between a low single-digit drop up to a low single-digit sales increase.

B&M has 786 stores in the UK operating under the B&M brand, plus 344 stores under the Heron Foods and B&M Express brands, while it also has 140 stores in France.

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