B&M issues third profit warning as price cuts fail to lure shoppers
B&M has issued its third profit warning since last summer as sales came under pressure despite heavy discounting. The retailer, which is pinning its hopes on a turnaround, downgraded its guidance for the year to March. It now expects adjusted Ebitda of between £440million and £475million, below its previous guidance of £470-520million.Last year, B&M launched its 'back to basic' transformation plan which included, among other measures, cutting prices on 35 per cent of its key items. It blamed investments in that pricing strategy, as well as its struggle to clear discontinued stock, for its weaker performance. Continued underperformance at its Heron Foods division is also weighing on the retailer, who said it would conduct a 'further review of its customer proposition'. The retailer issued its third profit warning within four monthsChief executive officer, Tjeerd Jegen, who joined in June, promised to ‘bring back excitement to our stores’. He said on Thursday: ‘The reset we are driving through Back to B&M Basics is necessary to rebuild the long-term value of the business and these workstreams continue to progress at pace.'He has said this will take 12-18 months to take effect but would revive sales growth in the UK.But he said he was 'encouraged' by Christmas trading with like-for-like sales growing 3 per cent in December.Products to do well included those in its seasonal grocery and toy ranges.The retailer has 786 B&M stores in Britain and 344 under the Heron Foods and B&M Express brands.The profit warning sent shares tumbling by more than 2 per cent on Thursday morning - contributing to losses of 47 per cent over the past year.Russ Mould, investment director of AJ Bell said: 'Ultimately, B&M remains in a state of flux while it tries to rearrange the furniture and get itself in a better position to mount a proper comeback. Investors show little faith judging by ongoing share price weakness.'There are some bold decisions for B&M to consider, such as jettisoning Heron Foods and rightsizing its store estate to focus on fewer but better performing units. Yet it still needs to get the core day-to-day operations in a healthier position before it can think about the bigger picture.'DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
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B&M issues third profit warning as price cuts fail to lure shoppers
