B&M’s profits have tumbled again as its new top team looks to land a “decisive plan” to return to the company to growth.
The discount retailer is under pressure from investors who are concerned about declining profits and stagnant growth in its UK stores. As a result, B&M’s share price has fallen almost 30% so far this year.
In a half-year trading update on Tuesday, B&M said profits sunk to £198m in the 26 weeks to 27 September, down from £274m in the same period ago. This was primarily due to the like-for-like performance of B&M UK and lower trading gross margins.
Like-for-like sales in the UK rose by just 0.1% in the first half of the year, with an uptick in general merchandise offset by a decline in food sales.
Ensuring the UK delivered sustainable growth was now the “absolute priority” as part of the new turnaround plan, said new CEO Tjeerd Jegen, who joined in June. The UK makes up almost 80% of B&M’s total revenue.
Jegen launched a review of the business after joining and concluded this week “that while B&M’s value proposition remains strong, our operational execution has been weak”.
“Our response is a decisive plan, ‘Back to B&M Basics’,” he added, noting the business had already sharpened its price position, and was “moving with pace” to refocus its ranges, improve on-shelf availability and bring back excitement to stores.
The plan would also include price cuts on key fmcg items, refreshed promotional activity, range simplification, and improvements to stock availability, he said.
“We have more work to do, but we are confident these changes will restore consistent like-for-like sales growth over time.”
B&M’s total group revenue grew 4% to £2.7bn, primarily due to the net addition of 15 new stores across the UK, France, and Heron Foods.
It forecasts earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the full year would fall between £510m and £560m, down from £620m the year before.
Its like-for-like sales UK sales returned to growth in the first quarter of the financial year after falling for four consecutive quarters last year.
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