(Reuters) -Discount retailer B&M reported a mere 0.6% rise in annual core profit on Wednesday and said its full-year sales came in short of expectations on weak demand from UK consumers. British
B&M Shares Drop 10% Following Disappointing UK Sales Results
By Raechel Thankam Job
(Reuters) -Discount retailer B&M said on Wednesday annual underlying UK sales fell short of its target and that higher costs would pressure profits in its new financial year, sending its shares more than 10% lower.
British retailers are bracing for a difficult year as rising taxes and wages increase their costs and shoppers remain cautious about spending amid economic uncertainty.
B&M's new CEO Tjeerd Jegen, who takes the helm later this month, will be tasked with fixing the group, which has seen its share price fall more than 40% from a 2022 peak.
B&M blamed poor weather and the timing of Easter for the 3.1% drop in UK like-for-like sales for the year ended March 29. It said this missed its target, but did say what the target was.
Analysts, however, expect sales to have picked up in the first quarter of the new financial year due to better weather and Easter demand.
Still, a lack of sales guidance for the new year may come as a disappointment, Jefferies analysts said.
A prolonged cost-of-living squeeze has taken a heavy toll on Britain's poorest shoppers, key customers for discount chains such as B&M, as well as Poundland and Primark, which have also had their struggles.
RBC Capital Markets analysts said that improving the in-store experience could help draw more shoppers to B&M's competitive prices.
B&M said its underlying fixed cost base for its new fiscal year would increase by about 75 million pounds ($102 million), in part due to the increase in Britain's minimum wage.
It said it would take steps to reduce that impact, without giving details. In a call with analysts, B&M executives said they aim to pass on as little as possible of the additional costs to customers
B&M's annual sales rose 3.7% to 5.6 billion pounds, driven mainly by new stores and strong performance in France.
Core profit edged up 0.6% to 620 million pounds, below Panmure Liberum's forecast of 625 million but above Jefferies at 616 million.
B&M expects to relocate its parent company's domicile from Luxembourg to Jersey this year.
($1 = 0.7387 pounds)
(Reporting by Raechel Thankam Job in Bengaluru. Editing by Sherry Jacob-Phillips and Mark Potter)
