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Shares in B&M plunged to a fresh all-time low after its boss warned profits are set to miss the mark, while promising to ‘bring back excitement’ for shoppers.
The discount retailer’s new boss insisted he had a ‘decisive plan’ to revive the company as he revealed sales in the UK came up short of expectations, falling by 1.1 per cent in the three months to September 27.
Profits for the half-year are now set to be £198m – a fall of 28 per cent compared to the same period last year – as the group said it had been hit by packaging and employer taxes.
In response to the unscheduled update, B&M shares fell as much as 21 per cent this morning, hitting a record low before rebounding strongly to trade 4.6 per cent down.
It said its wage costs have climbed by about £30million in the half-year, while a new packaging levy (known as the Extended Producer Responsibility scheme) has cost it £14million.
Chief executive officer, Tjeerd Jegen, said: ‘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.’
B&M chief executive Tjeerd Jegen said he will revive sales at the discount retailer
Jegen, who took over in June, admitted there was ‘more work to do’ but said he was confident he could turn the group’s fortunes around.
He said his rescue plan, dubbed ‘Back to B&M Basics’, will take 12-18 months to take effect but would revive sales growth in the UK.
The retailer has 786 B&M stores in Britain and 344 under the Heron Foods and B&M Express brands.
Dan Coatsworth, head of markets at AJ Bell, said that B&M’s approach of ‘trying to have something for everyone’ has ‘led to a jumble sale approach’ that has overwhelmed shoppers.
He added: ‘It’s good to have a plan; unfortunately, the retailer still needs to contend with the present, and trading has got even worse.
‘The market is royally disappointed, with the shares hitting a new all-time low on the update.
‘The journey to recovery starts now and it could be a long one.’
The turnaround effort comes as retailers are anxiously awaiting November’s Budget, which they fear will result in another slew of tax increases on the sector.
Businesses have been grappling with higher costs – to the tune of an extra £7bn across the sector – since Labour’s first Budget last autumn.
The industry was hit with a surprise hike in employer National Insurance contributions while costs such as wages and business rates were also increased.
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .