Shoppers have seen prices shift and ranges reshaped for months. Now fresh figures add pressure to a retailer in transition.
B&M said a systems upgrade earlier in the year led to £7 million of overseas freight costs being booked in the wrong place. The correction trims earnings guidance and lands as the chief financial officer, Mike Schmidt, prepares to depart once a successor is secured. The board has launched an independent review and maintains that the underlying issue has been fixed.
What B&M said
The discount chain told investors that adjusted earnings for the six months to September are expected around £191 million, down from a previous indication of £198 million. Full-year group guidance now sits at £470 million to £520 million, compared with the earlier range of £510 million to £560 million. Management still expects like-for-like sales in the second half to hover around flat, swinging between a small decline and a small gain.
The £7m freight mis-post came after an operating system upgrade and will weigh on this year’s results.
An external investigation will examine what went wrong in the upgrade and why controls failed to flag the error sooner. B&M said the underlying systems flaw has been remedied and day-to-day trading continues as normal across its stores.
How the numbers move
The revised guidance follows a separate warning a fortnight ago, when B&M flagged rising operating costs and a softer sales patch. UK sales in the second quarter fell by 1.1%, while wages and taxes increased markedly.
| Metric | Previous guidance | New guidance / reported | Change |
|---|---|---|---|
| H1 adjusted earnings | £198m (indicative) | ~£191m | −£7m |
| FY group adjusted earnings | £510m–£560m | £470m–£520m | Range lowered by ~£40m at midpoint |
| Q2 UK sales (like-for-like) | Not specified | −1.1% | Weaker than expected |
B&M expects second-half like-for-like sales to sit around the flat line, swinging a few points either side.
Key pressures hitting the tills
- Wage bill up by about £30m, reflecting pay awards and labour market tightness.
- Packaging taxes up by about £14m, adding a structural cost headwind.
- Freight cost error now corrected but still reducing this year’s earnings.
- Price cuts on selected “key value” lines to defend footfall and loyalty.
Will shoppers pay more?
Not immediately, based on what B&M has said. The company is trimming prices on some heavily shopped lines to keep baskets attractive and volumes stable. That points to tighter margins rather than across-the-board price hikes. Discount rivals remain aggressive, and B&M relies on sharp entry pricing to lure weekly top-up trips away from supermarkets.
Price actions usually target staples, seasonal bestsellers, and impulse products near the tills. Expect sharper tags on cleaning, confectionery, household paper, and small electricals, while slower-moving categories may see less promotional heat. On-shelf availability remains a focus as the chain tries to reduce gaps and speed replenishment.
Your basket may feel steadier, because B&M is choosing lower margins on some lines to hold traffic.
Why the error happened
Accountants say freight costs can slip through the cracks during system changes because they touch purchase orders, inventory valuation and period cut-offs. When an enterprise resource planning upgrade hits, mapping rules must ensure transport costs follow the goods to the correct month and legal entity. If those rules default to the wrong ledger codes, expenses can sit outside the intended period or category.
B&M’s correction suggests the costs were mis-recorded rather than missing, which still alters adjusted earnings, timing of recognition and performance metrics. The independent review will likely examine testing prior to go-live, segregation of duties, exception reporting, and reconciliation controls between logistics partners and the general ledger.
What happens to leadership
CFO Mike Schmidt will stay until a replacement is appointed. Continuity matters through a systems review and year-end reporting cycle. Investors will look for a finance chief with retail stock know-how, ERP remediation experience, and a record of tightening controls without slowing trading decisions.
What investors will watch next
Three questions now dominate: does like-for-like momentum stabilise through Christmas, do price cuts convert to volume, and does the review find a discrete error or wider control gaps? The range on full-year earnings remains broad, signalling uncertainty around peak trading and cost pass-through.
- Trading update cadence: weekly sales patterns into Black Friday and December.
- Gross margin mix: depth of markdowns on seasonal and general merchandise.
- Operating leverage: store labour scheduling versus traffic variability.
- Working capital: inventory days and any write-down risk after range resets.
What it means for staff and suppliers
A higher wage bill reflects pay settlements and scheduling to keep availability high. That can improve service and reduce shrink if executed well. Suppliers may see shorter order cycles and tighter intake standards as B&M protects cash and cuts aged stock. Freight partners can expect renewed scrutiny over billing accuracy and cutoff timing.
Packaging tax, in plain terms
The increase refers to charges linked to packaging rules, such as the plastic packaging tax, which raises costs for items with low recycled content. Retailers respond by redesigning packs, shifting suppliers, or absorbing the charge. Some costs flow through the shelf price, but switching materials and pack sizes can blunt the impact without shocking shoppers.
A quick basket sense-check
Guidance dropping by roughly £40 million at the midpoint does not automatically mean higher prices. Spread across millions of transactions, the hit is more likely to be managed by margin mix, supplier negotiations, and operational savings. For a £20 basket, a 1% shift equals 20p; targeted promotions on key lines can offset that perception even if margin tightens behind the scenes.
What you can do as a shopper
- Time visits around seasonal resets: early in promotional cycles offers the best choice at lower prices.
- Compare multi-buys to single-unit deals: unit-price labels show where value truly sits.
- Watch “key value” markers: these are the lines most likely to be protected or reduced.
- Check returns windows on non-food: range changes can lead to faster clearance rotations.
The road ahead for B&M
The company is refocusing ranges and pushing availability while an independent review hardens financial controls. If the like-for-like trend steadies and Christmas promotions pull in volume, B&M can defend earnings within the new range and keep pressure on rivals. If costs bite harder or the review exposes wider issues, guidance could stay wide and the share price may remain jumpy until auditors sign off.
For now, the error sits at £7 million, guidance narrows lower, and shoppers can expect sharper pricing on headline items. The work to rebuild confidence now shifts to the reliability of the numbers, the discipline of the ranges, and the feel of full shelves at busy times.
A £7m mis-post from a system upgrade plus a CFO exit isn’t a great look. Good that an independent review is on, but what about control testing before go‑live? Freight touches inventory, POs and cut‑offs—classic place for errors. If guidance drops ~£40m at midpoint, are suppliers being squeezed next, or will they eat margin via mix? Transparency on reconcilations fixes and exception reports would help rebuild trust.
So my basket stays the same price but their margins go on a diet? Sounds fair to me 🙂