B&M
B&M was 15% cheaper than the supermarkets. Its shelves looked full. Almost every shop was profitable. So how did £204m of profit disappear?
ALL BREAKDOWNSTHE BREAKDOWNFEATURE
11/3/20266 min read
B&M was 15% cheaper than the supermarkets.
Its shelves looked full. Almost every shop was profitable.
So how did £204m of profit disappear?
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THE SETUP
B&M is Britain's biggest variety discounter. 799 UK shops selling branded washing powder two aisles away from garden furniture and a wall of seasonal tat. Simon Arora and his brothers built it from a small discount chain in the north of England into one of the biggest retailers in the country.
When I wrote about Poundland earlier this year, B&M was the one that had got it right. Out of every £100 it took, about £11 came back as trading profit. A year later it was £8.
In the year to March 2026, sales rose from £5.57bn to £5.78bn. Profit before tax fell from £431m to £227m. The same £204m, going in opposite directions. Most of the damage was done in the UK, where B&M opened 41 new shops during the year. A new chief executive, Tjeerd Jegen, had arrived in June 2025 with the slide already under way.
The strange part is how healthy it all looked from the top. Sales were growing. Almost every shop was making money. B&M's own price checks said its grocery basket was around 15% cheaper than the big supermarkets. That was all true.
So how does a retailer this good at being cheap keep growing, stay cheaper than Tesco and still lose a quarter of its trading profit?
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THE PLAYBOOK
1. The board report: total sales
Total sales is the first number in any retail board pack. It goes up every time you open a shop, because a new shop takes money from day one. So, it can keep climbing for years while the shops you already had struggle.
B&M opened 41 UK shops last year, some of them moved to better sites. After closures it had 22 more than the year before. UK sales went up £132m.
The shops that were already open added nothing. Like for like sales, which compare the same shops year on year, were down 0.1%. The year before they were down 3.1%.
All of the growth came from new shops.
B&M says over 99% of its shops made money. Every new one passed its own test.
B&M made about £48m more from selling extra stock. But it lost around £69m because it was making less profit on what it sold.
Sales were growing, but the money left after paying for the stock was shrinking.
Every new shop gives management something to celebrate. Its another reason not to look too closely at the performance of the older shops.
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Takeaway: When a business keeps opening new shops, look at how the existing ones are performing. If their sales aren't growing, the new shops may be hiding a problem.
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2. The price index
If the old shops are flat, customers are coming less or spending less. The obvious suspect is price. The buyers' report said B&M was still cheap.
B&M tracked prices on a basket of around 3,000 grocery and household lines. Against the big supermarkets that basket stayed around 15% cheaper, even counting loyalty card prices.
Customers don't shop a basket average. For most people B&M is an extra trip, made to save money on a few things they buy every week. If their washing up liquid is cheaper on a Tesco Clubcard, the reason for the trip weakens. A few more of those and the whole shop starts to feel expensive.
In August 2025, Jegen's team checked the prices of 450 key products that customers regularly buy at B&M. These products accounted for around 20% of grocery sales. They discovered that 35% needed price cuts to remain competitive.
For a discount retailer, that's a serious problem. Customers come to B&M for low prices, but its average price checks had hidden the fact that many popular products weren't competitive.
Cutting those prices came at a cost. B&M made less profit on the products it sold, and grocery margins were still lower a year later.
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Takeaway: Don't rely on average prices to tell you whether you're competitive. What matters is the price of the products your customers buy most often.
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3. The full shelf
Low prices bring customers into B&M. But if they can't find what they came for, they might not come back. B&M's store inspections focused heavily on appearance. Shelves needed to look full and tidy. But a full shelf doesn't mean it contains the products customers actually want.
In November 2025, B&M admitted that stores had sometimes “prioritised the look of a full shelf” over having the right products available.
The numbers revealed the problem.
In the first half of the year, only 86% of its bestselling grocery products were available in the stores it monitored. The industry standard is 98%. That meant roughly one in seven popular products was missing.
For customers making a special trip to save money, finding an empty shelf defeats the purpose. They end up buying the missing items somewhere else. B&M had been measuring how good its shelves looked, rather than whether customers could find what they needed.
The problem was made worse by having too many different products competing for limited shelf space and staff time.
The solution was surprisingly simple.
B&M tested new stock replenishment routines on 240 popular grocery products across 11 stores. Availability improved to around 94%. When the changes were rolled out more widely, availability of bestselling brands reached 93% in the second half of the year.
B&M also plans to remove around 20% of products from its grocery shelves, making more room for the items customers actually buy.
A shelf full of the wrong ketchup is still, technically, a full shelf.
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Takeaway: Don't measure how good something looks. Measure whether it's delivering what customers actually want.
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ONE MORE THING
B&M blamed much of its profit decline on rising costs. Those costs were significant. Running its UK business became around £130m more expensive, an increase of 11.7%. Even excluding the new shops, costs rose 8.6%.
Higher wages, employer National Insurance and a new packaging tax were largely responsible.
But I think there's more to the story.
B&M's existing shops were already struggling before those costs increased. Sales in established shops had been falling since the previous financial year. Prices on popular products had become less competitive and customers couldn't always find what they wanted.
The higher costs made a bad situation worse. But they weren't the original problem. B&M had already started losing control of the things that made it successful.
The company's response is revealing.
In January 2026, B&M hired Simon Hathway to lead buying across the group. He had previously held the same role at Action, the successful Dutch discount retailer.
Hathway’s job is to get the basics right again: the right products, at the right prices, on the right shelves.
But turning the business around takes time.
Between April and June 2026, sales at established UK shops fell another 2.3% compared with the previous year.
B&M still wants to expand from 799 UK shops to around 1,200. New shops will bring in more sales and profit. But it won't solve the problems in the existing ones.
The next big test comes on 12 November, when B&M announces its half-year results.
The number to watch isn't total sales. It's whether the shops that were open last year are selling more. If they are, the turnaround may be working.
If they're not, B&M could be opening hundreds more shops while the business it already has continues to decline.
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THE PAPER TRAIL
Building B&M: speed, strategy and success
5 minute read
Twenty-one scruffy shops, a £525,000 purchase and a business that nearly collapsed within its first year.
https://www.businessleader.co.uk/insights/building-bampm-speed-strategy-and-success
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The secrets behind the success of discount stores
4 minute read
The original B&M playbook, explained through dog baskets, toys and the things its shops deliberately leave out.
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I tried the B&M scanner app
3 minute read
A reporter scans nearly 200 products looking for the secret discounts shoppers share online.
https://www.hulldailymail.co.uk/whats-on/shopping/tried-bm-scanner-app-lets-7390899
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The B&M scanner and the hunt for 10p bargains
3 minute read
Christmas trees, leftover Easter chocolate and out-of-season decorations: a guide to the shoppers who treat clearance hunting as a competitive sport
https://www.edinburghlive.co.uk/best-in-edinburgh/shopping/bm-scanner-app-how-use-23064796
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