Key Points at a Glance

  • UK-based B&M European Value Retail said Monday its chief financial officer will step down, while the company acknowledged incorrectly recognizing about £7 million ($9.39 million) in overseas freight costs in cost of sales, leading to a "material" impact on its fiscal 2026 outlook.
  • Mike Schmidt, who has served as the discount retailer's finance chief since 2022, has informed the board of his intention to step down but will remain until "a successor is in place to ensure an orderly transition," the company said in its announcement.
  • The retailer said it plans to launch a "third-party review" into the matter, noting the error stemmed from an operating system update earlier this year and that the related system issue has been "resolved."

Deeper Analysis

Shares fell about 22.75% on Monday following the news, and the company did not respond to requests for comment.

Schmidt has been B&M's CFO since October 2022, having previously spent nearly nine years at listed home furnishings retailer DFS, including the last three as CFO, according to his LinkedIn profile. Earlier in his career, he also worked at banks including UBS, Nomura, and Citigroup.

The discount retailer imports a range of goods, including toys and garden furniture, from Asia. Analysts at Shore Capital expressed concern over the news, suggesting the company's gross margin may be lower than expected, the Financial Times reported.

The company lowered its fiscal 2026 outlook Monday based on a revised second-quarter margin run rate, with adjusted EBITDA now expected between £470 million and £520 million, compared with a previous range of £510 million to £560 million, according to the announcement.

The revision comes about two weeks after it reported first-half fiscal 2026 results for the period ended September 27, with B&M saying Monday it discovered the issue after the October 7 announcement.

Earlier this month, CEO Tjeerd Jegen, who joined B&M in June, outlined a turnaround plan. In a statement accompanying the October 7 announcement, Jegen said a comprehensive review of the company's operations led him to conclude that "operational execution has been weak" and weighed on performance. He unveiled a new plan called "Back to B&M Basics," focused on restoring growth.

"We have sharpened our price positioning and are rapidly adjusting our assortment, improving on-shelf availability, and bringing energy back to our stores. There is more to do, but we believe these changes will progressively restore sustainable like-for-like sales growth," Jegen said in the announcement.

As part of the new plan, company executives said on the October 7 earnings call they aim to increase discipline by reducing the number of stock-keeping units, among other measures, while maintaining a focus on costs as they invest in technology to support analytics.

Asked by analysts on the call whether the company lacked analytical tools that could improve B&M's efficiency, Schmidt agreed that targeted technology investment was needed to support stores but struck a cautious tone. "Although this is a business that is very focused on bringing in technology... as a low-cost retailer, we remain disciplined in every area of spend," he said.