Liverpool-based value retail giant B&M sees half-year profits plummet by 28% amid flat sales and rising costs as bosses announced a ‘back to basics’ turnaround strategy. Tony McDonough reports
Flat sales and rising costs have sent half year profits plunging by 28% at Liverpool-based value retail giant B&M.
In an update to the stock exchange on Tuesday B&M, which has its headquarters and main distribution centre at Speke in south Liverpool, revealed details of trading for the 26 weeks to September 27, the first half of its fiscal year.
They showed profits of £198m, 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%.
Total revenues were just under £2.8bn, 4% up on last year. This was mainly due to the addition of 15 new stores across its UK and French B&M estates and at its UK frozen food chain Heron.
B&M operates more than 1,100 stores in the UK and France. An uptick in sales in April, thanks to the timing of Easter, was followed by poor sales in May. B&M France has continued to trade well, delivering 5.2% like-for-like sales growth during the first half.
Now, under pressure from worried investors, B&M’s management team has announced a turnaround plan focused on more competitive pricing, better in-store promotions, accelerating the clearance of discontinued ranges and improved product availability.
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 that we publish today.
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“Our response is a decisive plan, ‘Back to B&M Basics’, focused on returning the UK business to sustainable like-for-like growth. This is our absolute priority.
“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.”