B&M has issued a statement following a massive accounting error, coinciding with the news that a key figure at the company is stepping down. The discount retailer attributed the mistake to an operating system upgrade earlier this year, which resulted in £7 million of overseas freight costs being incorrectly recorded in their accounts.
In its latest announcement, the Budget store has revised its earnings and profit forecasts. B&M executives have also confirmed plans to launch a comprehensive independent investigation into the multi-million pound blunder.
This news was accompanied by the surprising disclosure that the firm’s Chief Financial Officer, Mike Schmidt, plans to vacate his role. He will continue in his position until a new finance chief is appointed, with the recruitment process currently in progress.
In a brief statement on Monday, B&M said: “The board wishes Mike well for the future.”
Following the accounting mishap, the retailer informed investors that despite rectifying the underlying issue, the multimillion-pound error would still affect its financial results this year. Adjusted earnings for the six months to September are now anticipated to be around £191 million, a decrease from its previous forecast of £198 million.
B&M has revised its projected group adjusted earnings for the financial year to between £470 million and £520 million, down from the previously indicated range of £510 million to £560 million. Despite this, the company still expects like-for-like sales growth in the second half of the year to be “between low-single-digit negative and low-single-digit positive levels”.
This adjustment comes just two weeks after BandM issued a profit warning due to rising costs and a dip in sales. The company reported a worse-than-expected 1.1% drop in UK sales for the second quarter.
The high street bargain store also disclosed that a £30million increase in wage costs was affecting results, along with a £14million hit from packaging taxes.
In an attempt to counter these challenges, B&M has implemented a series of measures to improve performance, including reducing prices on some of its key value items.
Tjeerd Jegen, the group’s chief executive, stated in early October that the company had cut prices and was working to refocus its ranges, improve on-shelf availability and “bring back excitement to our stores”, as reported by The Guardian.
