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The chief financial officer of B&M has stepped down after the discount retailer was forced to cut its profit forecast following an accounting error, sending its shares tumbling to an all-time low.
The London-listed company on Monday said about £7mn of freight costs had not been “correctly recognised” following an update to its operating systems earlier this year.
As a result, B&M is now projecting narrower margins and cut its guidance for adjusted earnings before interest, tax, depreciation and amortisation in the 2026 financial year to between £470mn and £520mn, down from an earlier estimate of £510mn to £560mn.
The retailer announced that chief financial officer, Mike Schmidt, had decided to step down, but would remain in place while the company searched for a successor.
The profit warning, the latest in a series over the past year, sent B&M’s shares down by about 15 per cent on Monday morning, hitting an all-time low.
The surprise announcement deepens the problems at a business that was until a few years ago regarded as one of the standout successes on the high street. It comes just two weeks after B&M issued its last profit warning and launched a “decisive” turnaround plan that will include reducing prices and cutting its product range.
Analysts at Shore Capital described the update as “very disappointing” and said it raises concerns that B&M is “less on top of its costs numbers than we would expect” and that it’s “running at a lower gross margin than we thought”.
B&M said in Monday’s statement that while the underlying system issue had been resolved, its board “intends to commission a comprehensive third-party review of this matter”.
The retailer imports vast quantities of merchandise from Asia, spanning everything from toys to kitchen appliances and garden furniture.
It was initially a beneficiary of the Covid-19 pandemic after being allowed to keep its stores open during lockdowns. But the subsequent surge in inflation drove up its costs and squeezed the spending power of its consumers.
Simon Arora, B&M’s former chief executive who had led a long period of successful expansion, left the business in 2022.
The retailer has struggled to respond to sharp competition from other discounters, including Home Bargains, as well as supermarkets. Before Monday’s announcement B&M’s shares had fallen about 60 per cent over the past two years.
Schmidt was appointed as the company’s finance chief in October 2022, having previously held the same role at furniture retailer DFS, a much smaller business.
Monique Pollard, an analyst at Citi, said B&M’s investors “were already sceptical of the [company’s] previous guidance” before today’s announcement.
His departure extends a period of management turbulence for B&M. The retailer, which dropped out of the FTSE 100 last December, announced the departure of chief executive Alex Russo in February, alongside a cut to its profit guidance for its previous financial year.
Schmidt served as interim chief executive until the appointment of Tjeerd Jegen as Russo’s permanent replacement in May.
