B&M: UK bargains retailer issues statement and admits £7m accounting mistake - sparking fears of price rises
The retailer is facing pressure as costs climb, profits dip, and shoppers wonder what’s next 🛒
- B&M has revealed a £7 million accounting error caused by a system upgrade earlier this year
- The mistake led to profits being overstated and has forced the retailer to revise its earnings forecasts
- An independent investigation is under way, while chief financial officer Mike Schmidt is stepping down
- The error comes as B&M faces rising staff and packaging costs and a recent drop in UK sales
- Bosses say they’re cutting prices and refocusing ranges to steady performance and restore shopper confidence
A major budget retailer has admitted to a major accounting blunder that’s wiped millions off its expected profits, and it could influence how the chain prices products in the months ahead.
B&M gas revealed that a £7 million error was discovered following an operating system upgrade earlier this year, which caused certain overseas freight costs to be wrongly recorded.
Although the mistake has since been corrected, it has forced B&M to revise its earnings forecasts and launch a full independent investigation into how it happened.
The timing couldn’t be worse for the high street favourite. The revelation came alongside the resignation of its chief financial officer, Mike Schmidt, who will remain in post until a replacement is found. The company’s board said in a short statement that it “wishes Mike well for the future.”
As a result of the blunder, B&M now expects earnings for the first half of its financial year (to September) to reach around £191 million, down from its earlier estimate of £198 million.
Full-year adjusted earnings are now predicted to land between £470 million and £520 million, a notable downgrade from the previous range of £510 million to £560 million.
For shoppers, the key question is whether this will affect prices on shelves. While B&M hasn’t announced any direct changes to pricing strategy, the retailer is under growing pressure from rising costs, weaker sales, and higher wages.
The firm recently admitted a £30 million increase in staff costs and a £14 million hit from new packaging taxes, both of which have dented profits.
Just two weeks before the accounting error was revealed, B&M issued a profit warning following a 1.1% fall in UK sales during the second quarter, worse than expected given the chain’s usual resilience during tighter economic periods.
But B&M’s leadership insists it’s taking action to steady the ship. Chief executive Tjeerd Jegen said earlier this month that the retailer had already cut prices on key value items, was refocusing its product ranges, and aimed to “bring back excitement to our stores.”
In short, while the financial mistake won’t directly impact shoppers’ wallets right now, B&M’s tightened margins may limit how aggressive its future discounts can be, at least until the company gets its finances firmly back on track.
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