Shares in discount retailer B&M dropped over 10% on Wednesday after the company reported a shortfall in annual UK sales and warned that rising costs would squeeze profits in the

coming year.

The retailer said like-for-like sales in the UK fell 3.1% for the year ending March 29, blaming poor weather and an early Easter. While it acknowledged missing its target, it did not specify what that target was.

Despite analysts anticipating a sales rebound in the first quarter of the new financial year due to improved weather and seasonal demand, B&M’s lack of forward guidance disappointed some investors. Jefferies analysts noted the absence of projections could weigh on market sentiment.

B&M also revealed that its underlying fixed costs would rise by approximately £75 million ($102 million) in the new fiscal year, partly due to the recent increase in the UK’s minimum wage. The company said it would work to limit the impact on customers but offered no concrete details.

The cost-of-living crisis has hit low-income shoppers hardest — a core demographic for discounters like B&M, Poundland, and Primark — contributing to wider struggles across the sector. RBC Capital Markets suggested that enhancing the in-store experience could help B&M attract more customers despite economic headwinds.

Incoming CEO Tjeerd Jegen, set to take over later this month, faces the challenge of reviving the company, whose stock has fallen more than 40% since its 2022 peak.

Despite UK challenges, B&M’s total annual sales rose 3.7% to £5.6 billion, boosted by new store openings and strong growth in France. Core earnings (EBITDA) ticked up 0.6% to £620 million, slightly below Panmure Liberum’s forecast but above Jefferies’ estimate.

B&M also announced plans to move its parent company’s legal base from Luxembourg to Jersey later this year. Photo by Davey2010, Wikimedia commons.