B&M sees profits fall 13 per cent to £431million – as shoppers cut back on spending
BUDGET retailer B&M has seen profits fall 13 per cent to £431million as shoppers cut back on spending.
The chain blamed poor weather at the start of its financial year for “very subdued” sales of its garden centre range.
And price cuts to attract customers are said to have reduced revenue from homeware, toys and electricals, and led to a profit warning in February.
Nevertheless, the opening of 36 new stores has seen revenues grow by 3.8 per cent to £4.5billion in the year to March.
The retailer now has 777 stores in the UK, as well as 343 Heron Foods and B&M Express outlets, and 135 shops in France.
The chain, which was founded in Speke in 1978, said it had adjusted its range to include more products at higher prices, which had boosted both the volume and value of sales in recent months.
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B&M said: “The underlying market trend towards discount retail continues, and the group’s value proposition will continue to resonate with consumers.”
Boss Alex Russo left in April but his successor Tjeerd Jegen is not due to take over until the middle of this month.
Russ Mould, investment director at AJ Bell, said: “The imminent arrival of a new CEO cannot come soon enough.
“Investors will be looking for the new boss to do a thorough review of the business, work out what’s gone wrong and outline a plan to get back on top.”
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Shares in the chain plunged by 12 per cent yesterday.
Mr Mould added: “Shrinking profits, reduced cash flow and higher net debt frame a poor year for B&M.
“It should have mopped up extra business from cash-strapped people looking for bargains.”
ALAS WH SMITH & TG JONES…
WH SMITH said it is on track to complete the £75million sale of its high street chain — which will see its name changed to TG Jones.
Its purchase by Hobbycraft owner Modella Capital, expected this month, means WH Smith, which opened its first branch in 1729, will quit the high street.
The 480 shops will become branches of TG Jones, with all staff moving to the newly named business.
Sales at WH Smith’s travel division, including shops in airports and stations, rose 5 per cent in the past three months.
HEALTHY SERVING
THE service sector returned to growth last month as customer confidence improved and fears over punishing US tariffs receded.
The S&P Global UK services PMI survey produced a positive score of 50.9 in May from April’s negative of 49, boosted by recovering global markets.
The report also showed optimism among businesses rose to its highest since October.
But service firms warned increased business uncertainty and budget pressure over higher labour costs “continued to dampen demand”.
PARAGON SURGE
SPECIALIST lender Paragon Bank enjoyed a profits surge of 26.7 per cent to £149.4million in the past six months.
Home lending soared as borrowers rushed to complete before the stamp duty holiday ended in early April.
New lending surged by a quarter over six months to the end of March to £810million.
Paragon made a £6.5million provision for its motor finance business while it waited for a court ruling, which could cost Lloyds Bank £1.2billion.
The Supreme Court is to make a ruling in the summer.
A GOLDEN YEAR FOR BROKER
HIGH gold prices helped pawnbroker Ramsdens' profits rise 54 per cent in the past six months to £6.1million.
The precious metal topped $3,500 per troy ounce for the first time on record in April, boosting interest among customers eager to cash in on jewellery.
The Middlesbrough-based chain sells it in its 169 stores, online or to a bullion dealer.
Revenues for its jewellery shop also surged 18 per cent year on year.
Boss Peter Kenyon said: “The gold price allows us to pay the customer more, means we make more as well, and also helps pawnbroking a bit with some of the recoveries when people don’t pay us back.”
Rival pawnbroker H&T last month agreed to be bought by US giant Firstcash for nearly £300million.
Mr Kenyon said: “If someone came with a big chequebook we’d have to listen.”
ECONOMY FAITH FALL
CONFIDENCE in the state of our economy has fallen from 45 per cent to just 28 per cent in the past ten years.
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A series of economic blows, including the cost-of-living crisis, Brexit, Covid pandemic and geopolitical upheaval, has dented our optimism, according to the Barclays Ten Years of Spend report.
But confidence in non-essential spending has held strong, at an average of 53 per cent, the report said.
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