Discount retailer B&M faced its second profit warning in the past three months due to the necessity of reducing prices to clear excess inventory. The company, which has seen its share price drop by half since May last year, initiated a “Back to Basics” strategy last October to refine pricing and streamline operations by trimming its product range across various categories.
In a recent trading update, B&M reported a 0.6% decline in sales at UK stores open for at least a year during the crucial three-month period ending December 27, including the holiday season. Despite this, management remains optimistic about the sales rebounding in the following months.
The company revised its full-year profit forecast to a range of £440 million to £475 million, a significant decrease from the previous guidance of £470 million to £520 million. This adjustment reflects a substantial decline compared to the £620 million profit reported in the previous fiscal year due to trading challenges and a £7 million oversight in accounting for overseas freight costs last October.
Tjeerd Jegen, the CEO appointed last year, emphasized the company’s commitment to investing in clearing discontinued product lines and implementing pricing strategies to strengthen B&M’s long-term prospects, albeit impacting short-term financial performance.
Additionally, Waterstones managed to counter rising labor-related expenses by reporting a slight increase in annual profits. The chain, with 316 stores and adding seven more by May last year, recorded profits of £49.7 million compared to £45.6 million the previous year, with turnover rising from £528.3 million to £565.6 million.
Waterstones attributed the profit boost to significant margin improvement initiatives and effective cost management to offset legislative payroll hikes. The company, like other retailers, faced escalating costs from increased national living wage and employer national insurance contributions.
Looking ahead, experts anticipate HMRC’s tax revenue reaching over £1 trillion soon, driven by factors like higher employer contributions and tax rate adjustments due to wage inflation. This coincides with the rush by taxpayers to file self-assessment returns before the January 31 deadline.
Furthermore, popular beer maker Black Sheep has been rescued in a £4.5 million deal, securing 145 jobs. The acquisition by the Paramount Retail Group aims to merge Black Sheep Brewery with Saltaire Brewery to form the Great British Drinks Company, pledging additional investments.
Lastly, a new UK bank, rebranded as This Bank, has launched offering competitive savings products. The bank’s easy-access account with a 3.82% interest rate surpasses the industry average, while fixed savings accounts provide attractive rates for prospective customers.