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(Sharecast News) - Discount retailer B&M said it expects full-year profits to fall by up to 18% after reporting weaker-than-expected underlying sales in the UK in the first half.
The company is guiding to first-half adjusted EBITDA of 198m for the 26 weeks to 27 September, down from 274m the year before, and a full-year result of 510m-560m, down from 620m.
Chief executive Tjeerd Jegen, who joined in June, said the company's operational execution has been "weak" and announced the launch of a 'Back to B&M Basics' plan focused on returning the UK business - which accounts for the bulk of group revenues - to sustainable like-for-like growth.
"This is our absolute priority," Jegen said. "We have more work to do, but we are confident these changes will restore consistent like-for-like sales growth over time."
Among the measures being taken are price cuts on 35% of B&M's FMCG key value items, resetting its 'Managers Specials' promotions strategy, refocusing product ranges to reduce line count and clear old stock, and restoring product on-shelf availability.
Over the first half, B&M reported group revenues of 2.75bn, up 4.0% on last year, driven by B&M UK value and volume sales growth, along with good trading momentum in France and the net addition of 15 new stores.
However, UK LFL sales were up just 0.1% as positive LFL volume and value growth in general merchandise was offset by a decline in FMCG LFL sales. For the second quarter alone, B&M UK LFL Sales were down 1.1% on last year "which was weaker than our expectations", B&M said.
Looking ahead, the company expects second-half UK LFL sales to grow between low-single-digit negative and low-single-digit positive levels.
"The full impact of Back to B&M Basics actions will take 12-18 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.