7th Oct 2025 09:41
(Alliance News) - B&M European Value Retail SA on Tuesday pledged to take decisive action after warning profits will be below expectations amid sluggish UK trading.
In an unscheduled trading update, the Luxembourg-based variety goods store chain in UK and France said B&M UK like-for-like sales fell 1.1% on year in the second quarter that ended September 27, weaker than its expectations, and below Visible Alpha consensus which forecast a decline of 0.4%.
In response, shares in B&M fell 11% to 229.30 pence. They have lost 45% in the last 12 months.
B&M said the timing of Easter and the early onset of good weather pulled forward demand for General Merchandise outdoor ranges, driving double-digit UK LFL sales growth in April.
But sales were weak in May as this trend reversed, following which B&M UK saw a progressive moderation in LFL sales declines in June and each period during the second quarter.
For the 26 weeks to September 27, B&M UK LFL sales increased 0.1% on year, below VA consensus for 0.5% growth.
Positive LFL volume and value growth in General Merchandise was offset by a decline in fast moving consumer goods LFL sales.
Gross margin for B&M UK in the first quarter was harmed by average selling deflation in General Merchandise and lower bought-in product margins, the company explained.
B&M France continued to trade well, delivering 5.2% LFL sales growth during the first half, while Heron Foods continued to trade profitability, although LFL sales remain "pressured".
Driven primarily by the LFL performance of B&M UK and lower trading gross margins across the first half, the company expects to report adjusted earnings before interest, tax, depreciation and amortisation of GBP198 million in the financial first half, down 28% from GBP274 million the year prior, and 22% below GBP254 million VA consensus.
For the full financial year, B&M expects adjusted Ebitda between GBP510 million to GBP560 million, which at the mid-point would be down 14% from GBP620 million the year prior, and is 12% below VA consensus GBP606 million.
In response, B&M said it is taking "decisive actions" to correct the operational weaknesses identified.
"While the full financial benefits will build over time, we have seen gradually improving trends in UK like-for-like sales and gross margins towards the end of the second quarter," it noted.
For the second half of the financial year, B&M expects UK LFL percentage growth rate of between low-single-digit-percentage negative and low-single-digit positive.
Chief Executive Officer Tjeerd Jegen, who joined B&M in June, said a comprehensive review concluded that, while B&M's value proposition remains strong, the operational execution has been weak.
He said the action plan, 'back to B&M basics', will be focused on returning the UK business to sustainable like-for-like growth.
"This is our absolute priority. We have already sharpened our price position, and we are moving with pace to refocus our ranges, improve on-shelf availability and bring back excitement to our stores. We have more work to do, but we are confident these changes will restore consistent like-for-like sales growth over time," he stated.
Specific actions include adjusting prices on FMCG key value items, or KVIs, rebooting 'managers specials' promotions, refocusing ranges and restoring product on-shelf availability.
B&M said it has cut prices on 35% of KVIs, lowering the average KVI line price by 1.8%.
"The full impact of 'back to B&M basics' actions will take 12 to 18 months to take effect, but we are confident they will restore B&M's value proposition and support a return to sustainable LFL sales growth for B&M UK. With LFL growth, future adjusted Ebitda profit margins are expected to stabilise at least at the FY26 outturn level," B&M said.
The firm opened 23 gross new stores in B&M UK during the first half (9 net) as part of plans to deliver between 40 to 45 gross new stores during the financial year.
The trading performance of new stores has met expectations, it said.
By Jeremy Cutler, Alliance News reporter
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