B&M UK sales squeezed as lower-income consumers miss out on wage rises
The retail chain said cutting some of its prices had resulted in it making less money for products like homeware, toys, and electricals.
In the UK, revenues declined by 3.1% over the year to March 29, compared like-for-like with the previous year.
However, including the impact of the 36 net new stores opened over the year, revenues grew by 3.8% to £4.5 billion.
The group's pre-tax profit fell 13% to £431 million year-on-year, which it said was impacted by higher interest and finance costs.
B&M, which has 777 stores in the UK and 135 in France, as well as 343 Heron Foods and B&M Express shops, said it faced a 'challenging' retail environment.
Shoppers were affected by limited wage growth, especially for its lower-income customer base who faced a cut-off in Government 'cost-of-living' payments during the year, the company said.
It also flagged heightened cautiousness to spend among consumers, and 'very subdued' garden spending due to poor weather at the start of its financial year.
Furthermore, B&M said its own operations 'could have been better' and it was now addressing this.
For example, it reduced prices on some general merchandise products in UK shops which drove a higher volume of sales, but dragged on the total value of sales over the year.
B&M said it had adjusted its range to now include more products sold at a higher price, which had boosted both the volume and value of sales in recent months.
The group said the year ahead would bring new challenges for the sector, namely higher labour costs and inflation.
It is expecting to face a roughly £75 million hit from increased national insurance contributions, the higher minimum wage, and additional packaging taxes which came in from April.
' Work continues to reduce the impact of these pressures, through driving productivity improvements and sales volume growth,' B&M said.
'The underlying market trend towards discount retail continues, and the group's value proposition will continue to resonate with consumers navigating ongoing economic pressures.'
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