Discount retailer B&M faced a second profit warning within three months due to the necessity of reducing prices to clear excess stock. The company, which has seen its share price plummet by half since May, initiated a “Back to Basics” initiative in October to enhance pricing strategies 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 in UK stores during the crucial three-month period ending on December 27, which includes the holiday season. Despite this, management remains optimistic about the sales recovery witnessed last month alone.
The company revised its full-year profit forecast to a range of £440 million to £475 million, down from the previous estimate of £470 million to £520 million. This represents a substantial decrease from the £620 million profit recorded in the previous fiscal year up to March 29. In addition to market challenges, B&M grappled with an accounting error last October, resulting in an unaccounted £7 million in overseas freight costs.
Tjeerd Jegen, the newly appointed CEO, emphasized the ongoing efforts to clear discontinued product lines and make strategic investments for the long-term success of B&M, acknowledging the short-term impact on financial performance.
Meanwhile, Waterstones reported a slight increase in annual profits, offsetting rising labor-related expenses. The bookstore chain, with 316 stores and seven new openings in the previous year, recorded profits of £49.7 million compared to £45.6 million the year before, with turnover climbing from £528.3 million to £565.6 million.
Waterstones attributed its financial success to the implementation of margin improvement strategies and effective cost management practices, countering the impact of legislative payroll increases driven by national wage and insurance hikes. The company also noted a rise in staff numbers to 3,703 and highlighted the significant pay increase for its top executive.
In other news, the Black Sheep Brewery, known for its popular Black Sheep beer, was saved in a £4.5 million deal, preserving 145 jobs. The brewery in Masham, North Yorkshire, was acquired by the Paramount Retail Group, which plans to merge it with Saltaire Brewery to create the Great British Drinks Company. The new owners intend to invest an additional £2 million in the business.
On the financial front, experts predict that HMRC’s annual tax revenue may surpass the £1 trillion milestone for the first time due to various contributing factors, including increased National Insurance Contributions and fiscal adjustments impacting taxpayers. This surge in tax receipts is expected in the near future, surpassing the approximately £910 billion collected in the year leading up to December 2025.