Lower-income customers lacking out on pay rises fuels fall in gross sales at B&M

One of Britain’s greatest bargain outlets has blamed a slide in gross sales and earnings on lower-income customers lacking out on salary rises.

B&M, which issued a benefit caution in February, stated customers have been extra wary about their spending over the last 12 months.

It added that its gross sales had fallen on account of “limited real wage growth”, in particular amongst its “core lower-income consumer groups” who had prior to now gained emergency price of dwelling enhance bills, which led to February 2024.

The store, which sells the whole lot from cleansing merchandise and dog food to lawn furnishings and inflatable sizzling tubs, stated similar gross sales at its 740-plus UK retail outlets reduced by way of 3.1% within the 12 months to the tip of March.

Pre-tax benefit fell by way of 13.2% to £431m because of upper depreciation and higher passion prices in addition to the “challenging UK retail trading environment”, B&M stated.

Shares within the corporate dropped by way of up to 7% throughout morning buying and selling on Wednesday after the effects, because it admitted its “operational execution could have been better”.

The UK’s greatest bakery chain, Greggs, stated in May its gross sales of iced beverages and snacks have been on the upward thrust, at the same time as customers remained wary. It added that it used to be taking advantage of the upward thrust in customers’ disposable revenue, helped by way of the April build up within the prison minimal salary.

Average wages around the economic system higher by way of 6.4% within the 12 months to April, in step with the newest legit payroll information from the Office for National Statistics, at a time when inflation used to be 3.5%.

Meanwhile, resorts and eating place group of workers controlled to safe an 8.5% build up in median pay over the 12 months to April, in step with the ONS, whilst retail employees have been paid 6.9% extra over the similar length.

Recent public sector pay awards have been additionally upper than ministers had prior to now stated the federal government may manage to pay for.

B&M must were profitable over new shoppers amid a squeeze on customers’ price range, in step with Russ Mould, the funding director on the dealer AJ Bell.

“The discount retailer blamed challenging market conditions, yet its value-led business model should have thrived in a period where consumers were watching their pennies,” Mould stated.

“It should have mopped up extra business from people trading down from more expensive options, while also being a shop of choice for cash-strapped individuals wanting bargains.”

Among the bargain-lovers recognized to buy at B&M are the previous high minister Boris Johnson and his spouse, Carrie, who just lately published on social media they’d taken their new child to their “favourite shop”.

B&M has been led by way of its finance director for the reason that departure of its leader govt, Alex Russo, in April. Russo’s successor, Tjeerd Jegen, will take the helm in mid-June.

Meanwhile, the store WH Smith, which is because of disappear from British top streets within the coming weeks, reported a 7% build up in gross sales at its trip stores in railway stations, airports and hospitals within the 13 weeks to the tip of May.

The corporate, which agreed to promote its 480 top boulevard retail outlets in March to the Hobbycraft proprietor, Modella Capital, in a deal price £76m, stated it anticipated to finish the sale on the finish of June.

WH Smith stated its final trip trade used to be on course to satisfy its full-year monetary goals, and stated it used to be “well positioned as we enter our peak summer trading period”.