B&M set to slash prices following profit warning
Budget retailer B&M has issued a profit warning for the year, attributing the tension to UK sales and rising operational costs.
The group reported a worse-than-like UK sales slump in its second quarter, with half-year underlying earnings up 28 per cent to around £198 million.
This financial pressure follows a significant increase in wage costs of £30 million in the first half ending 27 September, combined with a £14 million packaging levy under new extended producer responsibility rules.
As a result, B&M now forecasts full-year underlying earnings to fall by between £510 million and £560 million, representing an 18 per cent fall on the previous year.
The company said it was taking “decisive actions” to strengthen marking performance, but warned it could take up to 18 months for these measures to materialize.
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.”
Turnaround measures include cutting prices on some core value items, introducing more flexible “executives exclusive” promotions, refocusing and cutting the number of ranges it has, and increasing the availability of its most popular products on shelves.
Recently appointed chief executive Tjeerd Jegen said: “Since becoming CEO in June, I have started the work through a comprehensive review of our customer proposition and operations.
“We conclude that while B&M’s value proposition remains strong, our operational execution is weak.
“This impacted our first half trading performance and this is reflected in the full year outlook.”
“We have already sharpened our price position and are moving quickly to refocus our ranges, improve on-shelf availability and bring excitement back to our stores.
“We have more work to do, but we are confident that these changes will be consistent over time, resulting in consistent sales growth.”
While the group says it has seen an improvement in like-for-like sales in the UK since the second quarter, it still expects trading to be affected over the last six months, with a range between a low single-digit sales increase to a low single-digit decline.
B&M has 786 stores operating under the B&M brand in the UK, 140 stores in France, and 344 stores under the B&M brand and B&M Express brands.
