B&M issues profit warning
B&M has seen its third quarter group revenue increase by 2.9% as it became sharper on price to reinforce its value credentials to customers.
However, the company has warned on profit as investments to strengthen the business weigh on near-term financial performance.
Subscribe to TRBIn the 13 weeks to 27 December, B&M UK delivered total revenue growth of 1.9%. However, like-for-like sales declined by 0.6% after 3% growth in December and low single-digit declines in October and November.
B&M said its French business continued to perform well in a competitive market, delivering total revenue growth of 8.5% and like-for-like growth of 0.4%.
At Heron Foods, like-for-like sales edged down 0.1%, with profits coming in below expectations for the period.
Meanwhile, group revenue in the year to date has increased by 3.6%.
Giving an update on more recent trading, B&M said early January trading has seen a positive like-for-like trend continue, with a good customer response to clearance events across seasonal ranges and discontinued lines.
Tjeerd Jegen, B&M group chief executive officer, said: “We entered our Golden Quarter sharper on price to reinforce our value proposition with our customers.
“Price investment has continued, particularly in FMCG, and while the full benefits will take time to come through, I am encouraged by the early signs of like-for-like sales growth at B&M UK late in the quarter.
“This includes the strong sell through of our seasonal ranges, which contributed to 3% UK like-for-like growth in December, with similar like-for-like trends continuing in early January trading.”
As part of its Back to B&M Basics strategy, the company is identifying opportunities to make deeper investments in clearing discontinued lines. This will support planned reductions in SKU count and help clean up excess stock as the business restores on-shelf availability to industry benchmark levels.
Jegen said: “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 now expects its full year adjusted EBITDA to be in the range of £440 million to £475 million, compared with a previous guidance of £470 million to £520 million.
Jegen said: “I remain confident that the actions we are taking will restore sustainable like-for-like growth at B&M UK over the next 12 to 18 months and provide a strong foundation for future growth.”
