B&M, a major UK discount retailer, reported a fall in sales and pre-tax profits, blaming cautious spending by lower-income consumers who have not seen significant real wage growth and the end of government cost of living support payments. The company's shares dropped 7% following the announcement, despite expectations that its value-led model should thrive during financial squeezes. Other retailers like Greggs and WH Smith reported varying sales trends.
B&M sales and profits fall as lower-income consumers miss out on pay rises
Retail industryBusinessUKOffice for National StatisticsWH SmithUK cost of living crisisNational living wageMinimum wage
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TL;DR: Key points with love ❤️B&M, a major UK discount retailer, reported a fall in sales and pre-tax profits, blaming cautious spending by lower-income consumers who have not seen significant real wage growth and the end of government cost of living support payments. The company's shares dropped 7% following the announcement, despite expectations that its value-led model should thrive during financial squeezes. Other retailers like Greggs and WH Smith reported varying sales trends.
Trending- 1 February 2024: Government emergency cost of living support payments ended.
- 2 February (current year): B&M issued a profit warning.
- 3 12 months to the end of March (current year): B&M comparable sales fell by 3.1%.
- 4 April (current year): Legal minimum wage increased; Average wages across the economy increased by 6.4%.
- 5 May (current year): Greggs reported rising sales.
- 6 13 weeks to the end of May (current year): WH Smith reported a 7% increase in sales at its travel shops.
- 7 March (current year): WH Smith agreed to sell its 480 high street stores.
- 8 Wednesday (current day): B&M announced its sales and profits fall, and shares dropped.
- 9 Mid-June (future): New B&M boss is expected to arrive.
- 10 End of June (future): WH Smith expects to complete the sale of its high street stores.
- B&M's financial performance declined
- B&M shares fell significantly
- Highlights the ongoing impact of the UK cost of living crisis on lower-income consumers
- WH Smith is set to disappear from British high streets
What: B&M's sales and pre-tax profits fell; Shares in B&M dropped by as much as 7%; The company blamed lower-income consumers missing out on wage rises and a 'challenging UK retail trading environment'.
When: Past year (consumer caution), February (profit warning), February 2024 (end of government support payments), 12 months to the end of March (sales period), Wednesday (shares dropped), May (Greggs sales report), April (average wages data), mid-June (new B&M boss arrival), March (WH Smith high street stores sale agreement), end of June (WH Smith sale completion).
Where: UK, British high streets.
Why: Lower-income consumers missing out on wage rises; Consumers being more cautious about spending; Limited real wage growth, particularly among core lower-income consumer groups; End of emergency cost of living support payments from the government; Higher depreciation and increased interest costs for B&M; A 'challenging UK retail trading environment'.
How: Consumers became more cautious about their spending; Sales fell due to limited real wage growth; Pre-tax profit fell due to higher depreciation and increased interest costs; Shares dropped in early trading after results were announced.