B&M lowers profit guidance and announces CEO change
Shares in B&M have fallen after the discount chain reduced its profit guidance for the year as it fails to gain momentum in an ever-more-competitive market.
Its share price fell nearly five per cent in early trades.
The bargain retailer said it expected earnings before interest, tax, depreciation and amortisation (EBITDA) to be in the range of £605m to £625m, down from £620m to £650m.
It reported EBITDA of £629m for the year ending March 30, 2024, which was up 9.8 per cent year on year and at the top end of its guidance.
B&M attributed the change to the business’s current trading performance, an uncertain economic outlook, and the potential impact of exchange rate volatility.
The UK’s retail sector has been particularly under pressure recently from a lack of consumer confidence and income, changing tastes, and a rise in wage bills.
While this is a headache for all retail stores, B&M may be particularly affected as its traditional market becomes increasingly competitive.
Major supermarkets are all competing for the discount market with price-matching schemes, while other discount chains are rapidly expanding their networks of stores.
B&M shares have fallen more than 34 per cent in the past six months.
But Panmure Liberum analysts said they “remained steadfast that the cash returns profile and the quality of the earnings means this remains a Buy.”
The analysts reduced their target price for the stock from 630p to 600p.
Alex Russo to step down as CEO
Alex Russo will retire as CEO of B&M at the end of April after serving in the role for three years.
The company’s board told markets it was in the “advanced stages” of recruiting a new CEO and would provide an update “in due course.”
“The retirement of Alex Russo and a downgrade are unlikely to be mutually exclusive events… the performance of B&M has been disappointing for the past year,” Panmure Liberum analysts said.
Russo said: “I have thoroughly enjoyed my time at B&M… The business has been successfully steered through the pandemic years and is now larger and stronger with group revenues increasing by almost 50 per cent and cash distributions to shareholders in excess of £2bn 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 the UK and France. I wish the board and the leadership team every success in the years ahead.”
Chair Tiffany Hall said: “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.”