Discount retailer B&M faced its second profit warning in three months due to the necessity of cutting prices to clear excess inventory. The company, which saw its share price drop by half since May last year, initiated a “Back to Basics” strategy in October to enhance price competitiveness. Streamlining operations by reducing product variety across several categories was also part of the plan to simplify operations and drive cost savings.
In a recent trading update, B&M reported a 0.6% decline in year-over-year sales for the crucial three-month period ending December 27, which included the holiday season. Despite the drop, company executives indicated signs of improvement in sales performance in the last month alone.
The company revised its full-year profit forecast to a range of £440 million to £475 million, down from the previous guidance of £470 million to £520 million. This represents a significant decrease from the £620 million in profits recorded for the prior fiscal year, partly due to trading challenges and an accounting error related to unaccounted overseas freight costs.
Tjeerd Jegen, the CEO appointed last year, emphasized the strategic importance of investing in clearing discontinued products and adjusting pricing to strengthen B&M’s long-term position, even though these initiatives might impact short-term financial results.
Meanwhile, Waterstones reported a modest rise in annual profits despite higher labor costs. The retailer, with 316 stores following the addition of seven new stores in the last fiscal year, recorded profits of £49.7 million, up from £45.6 million the previous year. The company attributed the positive performance to margin improvement strategies and effective cost management that helped offset increased payroll expenses.
The ongoing rise in living wage and national insurance contributions has led to cost pressures for retailers, including Waterstones. The company’s workforce expanded to 3,703 employees, with its top executive witnessing a notable increase in pay and benefits.
On another note, experts predict that HMRC’s annual tax collection could surpass the £1 trillion mark soon. The tax authority is expected to receive a significant boost this month as individuals rush to meet the January 31 deadline for submitting self-assessment tax returns. Factors contributing to the potential revenue increase include higher employer national insurance contributions and fiscal drag caused by tax rate adjustments due to wage inflation.
In business developments, the popular beer brand Black Sheep has been saved through a £4.5 million acquisition deal, preserving 145 jobs. The Black Sheep Brewery, based in Masham, North Yorkshire, was purchased by the entrepreneurs behind Paramount Retail Group, who also own various companies in different sectors. The acquisition will lead to the creation of the Great British Drinks Company by merging Black Sheep Brewery with Saltaire Brewery, with plans to invest an additional £2 million into the new venture.
Lastly, a new UK bank, rebranded as This Bank, has launched today with a range of savings products offering competitive interest rates. The bank’s easy-access account pays 3.82%, exceeding the industry average, while also providing fixed-term saving options to customers. Chase Bank is another contender offering attractive rates for new customers, highlighting the competitive landscape in the banking sector.
These developments come as the founder of pub chain Wetherspoons raises concerns about the business rates disparity between pubs and supermarkets. The government is expected to unveil relief packages for the pub sector to help navigate the challenges arising from the end of pandemic support measures.
Overall, the retail and financial sectors continue to witness shifts and challenges, reflecting the dynamic nature of the business landscape in the UK.