𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

B&M has cut its profit guidance for the second time in a month, after it failed to properly account for an extra £7 million in costs.

The discount retail firm’s finance chief also said he plans to step down from the business in a surprise update on Monday.

It came after the London-listed firm said £7 million of overseas freight costs were “not correctly recognised in cost of goods sold” in its results update two weeks earlier.

B&M said this was linked to an operating system update earlier this year.

It told investors that the underlying issue has been resolved, but that it will have a financial impact on its results this year.

Adjusted earnings for the half year to September are set to have been around £191 million, reducing its previous estimate of £198 million.

B&M said group adjusted earnings are now set to be between £470 million and £520 million for the financial year, having previously guided to between £510 million and £560 million.

Bosses at the retail firm said they intend to launch a comprehensive “third-party review” into the incident.

It added that it still expects like-for-like sales growth to be “between low-single-digit negative and low-single-digit positive levels” over the second half of the year.

The update comes only two weeks after B&M blamed soaring costs and a slump in sales as it warned over profits.

It had reported a worse-than-expected 1.1% drop in UK like-for-like sales in the second quarter of the year.

Meanwhile, the firm also said it was impacted by a £30 million jump in wage costs and a £14 million hit in packaging taxes over the latest half-year.

It therefore launched a series of turnaround measures in an effort to help improve its performance, including cutting prices of some of its key value items.

On Monday, B&M also confirmed that chief financial officer Mike Schmidt has said he will step down from the role.

It has launched a search for his replacement, with Mr Schmidt staying on until the new finance boss is appointed.

Dan Coatsworth, head of markets at AJ Bell, said: “Just when it looked as if life couldn’t get any worse for B&M, along comes an accounting error which has ultimately cost the finance boss his job.

“The situation is highly embarrassing for the board and even worse for shareholders.

“While CFO Mike Schmidt hasn’t been fired, there was no way he could have stayed with the company given the severity of the error discovered in the retailer’s accounts.”

Shares were down 17.9% to 178.1p on Monday morning, slipping to record low levels.