Discount retailer B&M issued another profit warning today due to tough trading conditions, while announcing that its Chief Executive Alex Russo would step down after two and a half years in the role.
Just weeks after it narrowed its profit view following a disappointing Christmas period, B&M said today that its adjusted EBITDA was now expected to be in the range of £605m to £625m – down from the previous estimate of £620m to £650m.The company stated that the lower forecast “reflects the current trading performance of the business, an uncertain economic outlook and the potential impact of exchange rate volatility on the valuation of our stock and creditor balances, which is a non-cash item.”
In recent months, most of the UK’s major retailers have warned of a tough year ahead due to the continued cost of living crisis and the government’s decision to raise employer national insurance contributions, which is expected to lead to job cuts and higher prices.
Amid the rapid expansion of its store estate, B&M has looked to increase the number of items it sells and leaned on its competitive pricing to counter consumer caution. However, its like-for-like sales slid 2.8% over the key Christmas period, which was the chain’s third successive quarter of decline as cautious consumers reined in their spending.
Russo, who has held the top job since September 2022 and was earlier its finance chief, will retire at the end of April. B&M said it was in the advanced stages of a recruitment process to appoint a new CEO and will provide an update in due course.
Analysts at Jefferies said the management change was of “limited surprise” and noted that the profit warning indicated that an improved December/January like-for-like trend that B&M highlighted last month had not been sustained.
Tiffany Hall, Chair of B&M’s Board, commented: “Alex has increased our store footprint in both UK and France and driven a relentless focus on high operational standards and low costs, enabling the company to provide great products and everyday low prices to our customers whilst generating continued strong cash returns for our shareholders. We wish him well for the future.”
Russo added: “The business has been successfully steered through the pandemic years and is now larger and stronger, with group revenues increasing by almost 50% and cash distributions to shareholders in excess of £2.0bn during my tenure. It has been professionally rewarding to assemble and work with a high-quality leadership team and to retire leaving growing businesses with great potential in both UK and France. I wish the Board and the leadership team every success in the years ahead.”
NamNews Implications:
- To non-City eyes, a 2.5% drop in anticipated EBITDA seems trivial.
- But always good to manage expectations…
- Meanwhile, B&M is still worth a supplier-bet…
- …given its business model is better than most, for uncertain times.
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