B&M shares tumble as it cuts profit guidance and announces CEO exit

Shares in discount retailer B&M have taken a hit as the company lowered its profit guidance for the year, struggling to make headway in an increasingly competitive market.

The firm's share price dropped nearly five per cent in early trading, as reported by City AM.

B&M, which has its head office in Liverpool, now anticipates earnings before interest, tax, depreciation and amortisation (EBITDA) to fall between £605m and £625m, a decrease from the previous range of £620m to £650m.

For the year ending March 30, 2024, it reported EBITDA of £629m, marking a 9.8 per cent increase year on year and hitting the top end of its guidance.

The revision is attributed to current trading performance, economic uncertainty, and potential exchange rate volatility.

The UK retail sector has been under significant pressure due to dwindling consumer confidence and income, evolving consumer preferences, and rising wage bills.

This poses a particular challenge for B&M as competition intensifies in its traditional market. Major supermarkets are vying for the discount market with price-matching schemes, while other discount chains are rapidly expanding their store networks.

B&M shares have plummeted over 34 per cent in the past six months. However, analysts at Panmure Liberum remain optimistic, stating they "remained steadfast that the cash returns profile and the quality of the earnings means this remains a Buy."

They have reduced their target price for the stock from 630p to 600p.

Alex Russo is set to step down as CEO of B&M at the end of April, following a three-year tenure. The company's board has informed markets that it is in the "advanced stages" of appointing a new CEO and will provide further updates "in due course."

Analysts at Panmure Liberum commented on the situation, stating, "The retirement of Alex Russo and a downgrade are unlikely to be mutually exclusive events... the performance of B&M has been disappointing for the past year."

Reflecting on his time at the helm, Russo said: "I have thoroughly enjoyed my time at B&M... The business has been successfully steered through the pandemic years and is now larger and stronger with group revenues increasing by almost 50 per cent and cash distributions to shareholders in excess of £2bn during my tenure."

He added, "It has been professionally rewarding to assemble and work with a high quality leadership team and to retire leaving growing businesses with great potential in both the UK and France. I wish the board and the leadership team every success in the years ahead."