B&M has slashed its profit forecasts for the second time in just one month after discovering a £7 million accounting error. The discount retailer failed to properly record overseas freight costs in its recent financial results.
The company revealed the error was linked to an operating system update implemented earlier this year. B&M said the underlying issue has now been resolved, but warned of a significant financial impact on this year's results.
Financial impact deepens
The accounting mistake has forced B&M to reduce its half-year adjusted earnings estimate from £198 million to around £191 million for the period ending in September. The retailer also cut its full-year profit guidance from between £510 million and £560 million to between £470 million and £520 million.
B&M bosses announced plans to launch a comprehensive third-party review into the incident. The company said it still expects like-for-like sales to remain between low-single-digit negative and low-single-digit positive levels in the second half of the year.
Leadership changes announced
Chief financial officer Mike Schmidt has informed the company he plans to step down from his role in a surprise announcement. B&M has launched a search for his replacement, with Schmidt staying on until a new finance chief is appointed.
Previous challenges mount
The latest setback comes just two weeks after B&M blamed soaring costs and declining sales for its first profit warning. The retailer reported a worse-than-expected 1.1% drop in UK like-for-like sales during the second quarter.
The company was also hit by a £30 million increase in wage costs and a £14 million impact from packaging taxes over the latest half-year period. B&M responded by launching turnaround measures, including cutting prices on key value items.
Sources used: "PA Media" Note: This article has been edited with the help of Artificial Intelligence.
