B&M sales and profits fall as lower-income consumers miss out on pay rises

TruthLens AI Suggested Headline:

"B&M Reports Decline in Sales and Profits Amidst Wage Stagnation for Lower-Income Consumers"

B&M sales and profits fall as lower-income consumers miss out on pay rises analysis cover image The Guardian 7.6
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Original Article Source: https://www.theguardian.com/business/2025/jun/04/bm-sales-and-profits-fall-as-lower-income-consumers-miss-out-on-pay-rises
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AI Analysis Average Score: 7.6
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TruthLens AI Summary

B&M, one of Britain’s leading discount retailers, has reported a decline in both sales and profits, attributing the downturn to the struggles faced by lower-income consumers who have not experienced significant wage growth. The company indicated that sales fell due to a lack of real wage increases among its core customer base, particularly after the cessation of emergency cost of living support payments in February 2024. According to B&M, comparable sales at its over 740 UK stores dropped by 3.1% in the year leading up to March, while pre-tax profits decreased by 13.2% to £431 million. The retailer's results also reflected the impact of increased depreciation and rising interest costs amid a challenging retail environment in the UK, which has prompted caution among consumers regarding their spending habits.

Despite the general increase in average wages across the economy, which saw a rise of 6.4% in the year to April, B&M's performance suggests that many of its customers are still feeling financial pressure. Other retailers, such as Greggs, noted an increase in sales driven by a rise in disposable income due to wage increases, indicating a divergence in consumer behavior across different sectors. Analysts like Russ Mould have pointed out that B&M's value-driven model should have positioned it well to attract customers looking to save money during tough economic times. However, the company acknowledged that its operational execution could have been improved. Following the release of its financial results, B&M's shares fell by up to 7%, and the company is currently under the interim leadership of its finance director after the departure of its chief executive, Alex Russo, with Tjeerd Jegen set to take over in mid-June. Meanwhile, WH Smith has reported success in its travel segment, indicating that some areas of retail are still performing well despite the overall economic challenges.

TruthLens AI Analysis

The current news article sheds light on the financial struggles faced by B&M, a prominent discount retailer in the UK. It highlights how the economic challenges stemming from stagnant wages for lower-income consumers have affected the company's sales and profits. This analysis will explore the implications of the report, public perceptions, and potential impacts on the broader economy.

Economic Context and Consumer Behavior

The article indicates that B&M's decline in sales is directly linked to lower-income consumers who have not benefited from wage increases. This demographic previously relied on emergency cost-of-living payments, which have now ceased. The caution exhibited by consumers regarding spending is reflective of broader economic trends, where real wage growth has not kept pace with inflation, leading to decreased purchasing power.

Comparative Analysis with Other Retailers

Interestingly, the article contrasts B&M's situation with that of Greggs, a successful bakery chain. Greggs has seen an uptick in sales, suggesting that some sectors within retail are managing to attract consumers despite financial constraints. This disparity may reflect differing product offerings, brand loyalty, and marketing strategies.

Impacts on Stock Market and Investment Sentiment

The drop in B&M's shares by 7% indicates a negative reaction from investors, likely tied to concerns over the company's operational execution and the challenging retail environment. This could signal a broader unease in the retail sector, affecting other stocks in the industry as investors reassess the viability of businesses heavily reliant on lower-income demographics.

Social Implications and Public Sentiment

The report could foster a sense of concern among consumers, particularly those in lower-income brackets who might feel the pressure of rising costs without corresponding wage increases. This narrative may resonate with the public, prompting discussions about wage policies, cost-of-living adjustments, and the need for economic reforms.

Potential Manipulation and Media Influence

While the article presents factual information, the framing of B&M's struggles could be perceived as an attempt to highlight the plight of lower-income consumers without addressing the broader systemic issues at play. The language used, including terms like "cautious spending" and "profit warning," may evoke feelings of urgency and concern, potentially pushing for a call to action among policymakers.

The overall reliability of this news piece is grounded in the presentation of concrete data regarding sales and profits, as well as comparisons with wage growth statistics. However, the framing choices can influence public perception, leading to a focus on the plight of lower-income consumers while possibly obscuring deeper economic challenges.

Unanalyzed Article Content

Source URL: https://www.theguardian.com/business/2025/jun/04/bm-sales-and-profits-fall-as-lower-income-consumers-miss-out-on-pay-rises

One of Britain’s biggest discount retailers has blamed a slide in sales and profits on lower-income consumers missing out on wage rises.

B&M, which issued a profit warning in February, said consumers had been more cautious about their spending over the past year.

It added that its sales had fallen because of “limited real wage growth”, particularly among its “core lower-income consumer groups” who had previously receivedemergency cost of living support payments, which ended in February 2024.

The retailer, which sells everything from cleaning products and pet food to garden furniture and inflatable hot tubs, said comparable sales at its 740-plus UK stores decreased by 3.1% in the 12 months to the end of March.

Pre-tax profit fell by 13.2% to £431m as a result of higher depreciation and increased interest costs as well as the “challenging UK retail trading environment”, B&M said.

Shares in the company dropped by as much as 7% during morning trading on Wednesday after the results, as it admitted its “operational execution could have been better”.

The UK’s largest bakery chain,Greggs, said in May its sales of iced drinks and snackswere on the rise, even as consumers remained cautious. It added that it was benefiting from the rise in consumers’ disposable income, helped by the April increase in the legal minimum wage.

Average wagesacross the economyincreased by 6.4% in the year to April, according to the most recent official payroll data from theOffice for National Statistics, at a time when inflation was 3.5%.

Meanwhile, hotels and restaurant staff managed to secure an 8.5% increase in median pay over the year to April, according to the ONS, while retail workers were paid 6.9% more over the same period.

Recentpublic sector pay awardswere also higher than ministers had previously said the government could afford.

B&M should have been winning over new customers amid a squeeze on consumers’ finances, according to Russ Mould, the investment director at the broker 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 said.

“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.”

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Among the bargain-lovers known to shop at B&M are the former prime minister Boris Johnson and his wife, Carrie, who recently revealed on social media they had taken their new babyto their “favourite shop”.

B&M has been led by its finance director since the departure of its chief executive, Alex Russo, in April. Russo’s successor, Tjeerd Jegen,will take the helm in mid-June.

Meanwhile, the retailer WH Smith, which isdue to disappear from British high streetsin the coming weeks, reported a 7% increase in sales at its travel shops in railway stations, airports and hospitals in the 13 weeks to the end of May.

The company, which agreed to sell its 480 high street stores in March to the Hobbycraft owner, Modella Capital, in a deal worth £76m, said it expected to complete the sale at the end of June.

WH Smith said its remaining travel business was on track to meet its full-year financial targets, and said it was “well positioned as we enter our peak summer trading period”.

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Source: The Guardian