B&M launches online delivery for bulky items

B&M shares crashed after it warned that profits would be hit as customers rein in spending.

The discount retailer said that sales this year will be lifted by hard-up shoppers looking for discounts to combat the cost of living crisis. 

But they will be buying food and household items, rather than more profitable general merchandise, such as white goods and home accessories.

As a result, B&M said profits for the year will be between £550million and £600million, a drop from pandemic-fuelled highs it has booked in the past two years. 

B&M also said sales this year have been running 13.2 per cent lower than last year and 11.5 per cent below the same time two years ago, suggesting the boom has eased.

The bleak update came as B&M said finance boss Alex Russo, who joined B&M in 2020 after stints in charge of finance at Wilko and Asda, will succeed Simon Arora as chief executive.

Shares in the business fell 15 per cent, or 69p, to 389.7p. They are down 38.5 per cent this year.

Arora, who is leaving in April next year, said: ‘The retail industry is facing inflationary pressures whilst our customers are having to cope with a significant increase in the cost of living, making spending behaviour in the year ahead difficult to predict.

B&M shares are down 38.5% this year

‘However, we have seen before that during such times customers will increasingly seek out value for money, and B&M is ideally placed to serve those needs.’

In a surprise shift, B&M also said it will launch an online delivery service for the first time featuring around 1,000 bulkier and higher ticket general merchandise items.

The trial will be monitored in the coming months and the retailer said it could steal customers from rivals with its low prices.

Simon Arora and his brother Bobby took over in 2004 and have taken B&M from the brink of insolvency to the FTSE 100.

The business was a small, loss-making chain of stores in north-west England and is now a retail giant with 709 B&M stores and 300 Heron Foods convenience stores in the UK, as well as 103 stores in France.

Tough task: Alex Russo is taking the top job

The announcements yesterday came alongside its results for the year to March 26 in which sales slipped 2.7 per cent to £4.7billion. It also reported £619million profit, a 1.2 per cent slip from a year earlier.

Both figures were well ahead of pre-Covid levels as the retailer was buoyed by booming demand for gardening supplies, tables, chairs and kit for DIY, but it has taken a hit as the Covid boom eases.

Hargreaves Lansdown analyst Sophie Lund-Yates said: ‘While on one hand, struggling customers may be tempted to try a value name, on the other, B&M’s core existing customers may hold off buying the extra non-essential items the chain is famed for.’