Discount retail giant B&M has issued another profit warning, marking the third downward revision to its annual earnings outlook since last October as the company continues to implement its comprehensive turnaround strategy.
Sales Performance and Revised Guidance
The group revealed that UK like-for-like sales declined by 0.6% during the crucial quarter ending December 27. However, there was a more positive note with an "encouraging" 3% sales increase recorded in December alone, and the company indicated that this growth trend has persisted into January.
In response to ongoing challenges, B&M has significantly reduced its full-year underlying earnings forecast to a range of £440 million to £475 million. This represents a substantial decrease from the previous guidance of £470 million to £520 million, and a dramatic fall from the £620 million in underlying earnings reported for the year ending March 29, 2025.
Market Reaction and Strategic Investments
The announcement triggered immediate market reaction, with B&M shares dropping as much as 5% during Thursday morning trading before settling at a decline of over 1%.
B&M attributed the profit warning to several strategic factors, stating: "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."
The company's Heron Foods subsidiary experienced a 0.1% sales decline over the latest quarter, contributing to the overall financial pressure.
Turnaround Plan Implementation
B&M has intensified efforts to reduce excess inventory through substantial discounting initiatives, expressing confidence that these measures "can restore sustainable like-for-like growth at B&M UK over the next 12 to 18 months."
The retailer's "back to basics" transformation plan, launched in October, has involved sharpening price competitiveness with across-the-board reductions while simultaneously streamlining operations through significant product range reductions in multiple categories.
Operational Challenges and Leadership Perspective
Beyond current trading pressures, the company faced additional difficulties last October when an accounting error emerged involving £7 million in unaccounted overseas freight costs, which previously prompted an earnings guidance reduction.
B&M confirmed on Thursday that its investigation into this incident has concluded, adding that "implementation of the report's recommendations on specific IT and financial operational processes is under way."
Tjeerd Jegen, who assumed the chief executive role last year, provided insight into the strategic direction: "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."
The company maintains that its current strategic investments, while negatively affecting immediate financial results, are essential for building sustainable long-term growth and operational efficiency across its retail operations.
