Liverpool retailer B&M sees shares plummet amid a £7m accounting blunder, a profits forecast downgrade and the imminent departure of its chief financial officer. Tony McDonough reports

Value retailer B&M saw its share price plummet on Monday morning following news of a £7m accounting blunder.

Liverpool-based B&M, which operates more than 1,100 B&M and Heron frozen food stores in the UK and France, has downgraded its full-year profits outlook to a range of £470m to £520m from £510m to £560m.

Around £7m of overseas freight costs were not correctly recognised in the cost of goods sold, following an operating system update earlier this year. The underlying system issue has since been resolved but its financial impact is “material” to its full fiscal year.

Mike Schmidt, chief financial officer, has advised the board of his intention to quit. A search for his successor has started and Mike will remain with the company until a replacement is in place to ensure an orderly transition.

In Monday’s statement, B&M said: “As previously disclosed, B&M UK’s like-for-like sales are expected to be the principal driver of the outcome within this range, for which we reaffirm our assumption of a second half UK LFL percentage growth rate of between low-single-digit negative and low-single-digit positive levels.

“The Group continues to expect that with LFL growth, future adjusted EBITDA margins for B&M UK can stabilise at low-double-digit percentage levels over the medium term.”

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In early October LBN reported that flat sales and rising costs had sent half-year profits plunging by 28% at B&M. The company, which has its headquarters and main distribution centre at Speke in south Liverpool, revealed profits of £198m.

These were significantly lower than the £274m reported for the same period last year. Like-for-like sales in its UK stores, from where it gets 80% of its revenues, were up just 0.1%.