Discount retailer B&M faced its second profit warning in three months, attributing the need to reduce prices to clear excess stock. The company, which saw its share price drop by half since May last year, initiated a “Back to Basics” strategy in October to enhance pricing competitiveness and streamline operations by trimming its product range across various categories.
In a recent trading update, B&M reported a 0.6% decline in like-for-like sales at its UK stores for the crucial three months ending December 27, encompassing the Christmas period. Despite this setback, company executives highlighted a positive trend in sales during the last month.
The firm revised its full-year profit forecast to a range of £440 million to £475 million, down from the earlier projection of £470 million to £520 million. This adjustment represents a substantial decrease from the £620 million profit recorded in the prior fiscal year ending March 29. In addition to trading challenges, B&M faced a setback last October due to an accounting error amounting to £7 million in unaccounted overseas freight costs.
Tjeerd Jegen, the company’s newly appointed CEO, emphasized the ongoing commitment to the “Back to B&M Basics” initiative, stating that strategic investments to clear discontinued product lines and maintain competitive pricing are aimed at bolstering the company’s long-term prosperity, albeit impacting short-term financial performance.
Meanwhile, Waterstones, a prominent book chain, reported a slight rise in annual profits despite increased labor-related expenses. The retailer, with 316 stores and seven new additions by May last year, achieved a profit of £49.7 million, up from £45.6 million the previous year, with turnover climbing from £528.3 million to £565.6 million.
Efficient margin improvement strategies and cost management efforts helped mitigate the impact of rising labor costs stemming from national wage increases and employer contributions. Staff numbers at Waterstones increased from 3,641 to 3,703, and the highest-paid executive saw a rise in pay and benefits to £421,000.
In other news, experts predict that HMRC’s annual tax revenue could surpass £1 trillion for the first time, driven by factors such as increased National Insurance Contributions and tax revenue growth due to wage inflation. The tax authority anticipates a boost in collections as taxpayers rush to file their self-assessment tax returns by the January 31 deadline.