(Reuters) -British discount retailer B&M cut its annual profit forecast on Monday after discovering it had failed to properly account for 7 million pounds ($9.40 million) in overseas freight costs,
B&M Shares Plummet After Profit Forecast Cut Due to Accounting Mistake
B&M's Financial Challenges and Leadership Changes
By Raechel Thankam Job
Impact of Accounting Error
(Reuters) -B&M's shares fell to a nine-year low on Monday after the UK discount retailer cut its profit forecast, saying it had not properly accounted for 7 million pounds ($9.40 million) in overseas freight costs.
Leadership Transition
Shares in B&M, which have lost 62% of their value from a January 2022 peak, were down 16% at 0800 GMT after it said it expects core profit to be between 470 million pounds and 520 million pounds for the year ending March 2026, versus its previous 510 million pounds to 560 million pounds estimate.
Market Reaction and Future Outlook
B&M also announced that Mike Schmidt had advised the board of his intention to step down as CFO. It did not give a reason.
"A search for his successor has commenced and Mike Schmidt will remain with the company until a replacement is in place to ensure an orderly transition. The Board wishes Mike well for the future," the company said in a statement.
B&M said that the accounting error stemmed from an operating system update earlier this year and that it plans to commission a third-party review of the matter.
"Obviously the maths do not add up, whilst no further explanation has been provided by the company," JP Morgan analysts said in a note, referring to the 7 million pound error against a 40 million pounds downgrade.
B&M said that the underlying system issue behind the accounting error, which was discovered during its half-year results consolidation process, has been resolved.
Schmidt, who joined B&M as CFO in October 2022, will stay on until a successor is in place, it added.
Only two weeks ago, B&M's newly-appointed CEO Tjeerd Jegen launched a turnaround effort aimed at tackling falling profits and problems including inconsistent pricing, poor shelf availability and overly complex ranges.
($1 = 0.7448 pounds)
(Reporting by Raechel Thankam Job and Yadarisa Shabong in Bengaluru; Editing by Harikrishnan Nair and Alexander Smith)
