Retailer B&M warned that its profits could fall as customers struggling with a cost-of-living crisis choose cheaper products.
He highlighted the “uncertain macroeconomic outlook” that could prompt customers to switch to cheaper products, making it difficult to predict the impact of inflation on sales volumes.
Households in Britain have to deal with inflation hitting a 40-year high as consumer prices rise, especially due to higher energy prices. This left them with less money for discretionary spending and made investors worried about the prospects for retail traders.
B&M’s share price fell more than 11% on Tuesday morning, the biggest drop on the FTSE 100 index. The share price fell to its lowest level since June 2020, three months before B&M joined the FTSE 100.
B&M was one of the Covid winners in the retail industry as it was allowed to stay open during the shutdowns.
B&M said Tuesday it expects customers to shift spending from higher-margin discretionary products like gardening items and Christmas decorations in favor of essentials like food and toiletries.
Discount retailers such as B&M hope the impact will be mitigated as shoppers look for cheaper options. However, Simon Arora, B&M’s major shareholder and outgoing CEO, acknowledged the difficulties facing the industry