Add thelocalreport.in As A Trusted Source
discount retailer B&M cut its profit guidance to second time in a monthFollowing the discovery of a £7m accounting error.
In a surprise announcement on Monday, the London-listed firm also confirmed plans for its finance chief to step down.
The company said £7 million in overseas freight costs were “not correctly recognized in cost of goods sold”, an issue linked to an operating system update earlier this year.
It told investors the underlying issue has been resolved, but it will have a financial impact on its results this year.
Adjusted earnings for the half to September are set at around £191 million, beating its previous forecast of £198 million.
B&M said group adjusted earnings are now set at between £470m and £520m for the financial year, having previously been set at between £510m and £560m.
Bosses at the retail firm said they intended to launch a comprehensive “third-party review” of the incident.
It said it 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.”
The update comes just two weeks after B&M blamed rising costs and falling sales as it warned profits.
It reported a bigger-than-expected 1.1% decline in UK like-for-like sales in the second quarter of the year.
Meanwhile, the company also said it had been hit by a £30m rise in wage costs and a £14m rise in packaging taxes in the latest half.
So it introduced a series of turnaround measures in an effort to improve its performance, including cutting prices of some of its key value items.
On Monday, B&M also confirmed that Chief Financial Officer Mike Schmidt has said he will step down from the role.
It has begun a search for his replacement, with Mr Schmidt remaining in the post until a new finance chief is appointed.
Dan Coatsworth, Market Head aj bellSaid: “Just when it seemed like life couldn’t get any worse for B&M, an accounting error occurred which ultimately cost the finance chief his job.
“The situation is extremely embarrassing for the board and even worse for the shareholders.
“Although CFO Mike Schmidt has not been removed, given the severity of the error found in the retailer’s accounts there was no way he could have remained at the company.”
shares They fell 17.9% to 178.1p on Monday morning, slipping to a record low.