B&M's Profit Halving Exposes a Wider Retail Fault Line

B&M's numbers: a profit halving that still beat expectations

The discount homeware and grocery chain posted group pre-tax profit of £227m for the year to 28 March, down from approximately £430m the prior year, on revenue of £5.8bn, itself down 3.6 per cent, according to the company's annual results published on 3 June.

Like-for-like sales, those from stores open at least a year, fell 0.1 per cent. The company, which was relegated from the FTSE 100 in 2024 after a four-year spell on the index, now sits in the FTSE 250.

Tjeerd Jegen, B&M's chief executive, called it "a difficult year that saw profits fall due to a challenging market and execution issues," according to the results statement. He said the 700-store chain launched a turnaround plan in October designed to "restore like-for-like sales growth at B&M UK."

"The past six months has seen us sharpen our pricing, improve on-shelf availability in best-selling brands and revamp our in-store promotions."

Jegen also said B&M was "confident we can offset rising energy costs in the year ahead through cost mitigation, the benefits of which will flow through to our bottom line once we have returned B&M UK like-for-like sales to growth."

Despite the headline profit decline, shares rose 17 per cent to 199p on the day. Jonathan Pritchard, an analyst at Peel Hunt, said the results "were a beat versus our and consensus expectations," with earnings roughly "2% clear of hopes," as reported by City A.M. Pritchard added that "some of the 'back to basics' plans are clearly having an impact."

B&M began in Blackpool in 1978 and now employs around 35,000 people, serving approximately 4 million shoppers a week across its UK estate and roughly 150 outlets in France.

The digital challengers: Peeko and Debenhams online

The same day brought updates from two quite different digital models, each competing for the same cost-conscious consumer.

Huddled and Peeko

Huddled (LSE: HUD), the London-listed firm behind the Peeko website, reported first-quarter 2026 revenue of £4.2m, down from £4.4m a year earlier. The company attributed the dip to a "strategic decision to moderate volume while structural issues were addressed," according to its trading update.

The more notable figures were operational. Peeko received 86,000 orders between January and April, at an average order value of £37 and a product margin per order of £17. Huddled describes Peeko as "an online Costco," offering discounted surplus supplies from a range of brand-name suppliers.

Martin Higginson, Huddled's chief executive, said: "We have a great value proposition, next-day delivery, genuine customer loyalty, and the margins to justify scaling." Huddled shares rose 7 per cent to 0.78p on the day.

Debenhams and Boohoo

Boohoo Group (LSE: BOO), which acquired the Debenhams brand for £55m in January 2021 in a deal that included no stores and no staff, also reported. By the end of May 2021, all 118 remaining Debenhams department stores had closed. The brand, which traces its origins to a drapers' shop on London's Wigmore Street in 1778, now operates as what its parent calls "Britain's online department store."

In the first quarter to the end of May 2026, Debenhams Group gross merchandise value rose 0.5 per cent year-on-year, with trading in May "particularly strong," according to Boohoo's update. Group gross margins hit 53.5 per cent, up from 52.1 per cent a year earlier. Returns fell by about 5 per cent. Exceptional costs were cut by 72 per cent and capital expenditure by 54 per cent year-on-year.

Dan Finley, Boohoo's chief executive, said: "Debenhams Group has returned to growth, and Q1 marks the inflection point we have been working towards. This is the result of the heavy lifting of our multi-year turnaround: the move to an asset light marketplace model, the warehouse consolidation, the cost reset, and the rebuild of every brand on a single proprietary platform."

Boohoo shares rose more than 11 per cent to 21p on the day.

Consumer spending under pressure: what the data shows

The competitive intensity across these three models sits against a backdrop of sustained household financial stress.

Research published the same week by Vanquis, the banking firm specialising in credit for consumers who may not qualify for it elsewhere, found that almost a third of respondents to its Financial Wellbeing Index rely on credit to cover everyday costs. Energy bills were up 17 per cent over two years, according to the Vanquis data.

Groceries were identified by 25 per cent of respondents as one of the most common triggers for wiping out savings, followed by car repairs at 19 per cent and utility bills at 17 per cent.

The conflict in Iran, involving the US and Israel, has stoked further rises in global oil prices, as reported by City A.M., which will feed through to consumer energy costs in a similar pattern to the post-Ukraine invasion period.

UK retail generates roughly £490bn in annual sales and is the largest private-sector employer, responsible for around 3 million jobs, according to industry data. The sector's scale means that shifts in operating models carry consequences well beyond shareholder returns.

What operators should watch next

Three distinct models are now competing for the same pound in the consumer's pocket, and each carries different structural risks.

Physical discount retail, represented by B&M, offers immediacy and impulse purchasing but bears the full weight of property costs, energy bills, and a large workforce. B&M's turnaround plan, focused on sharper pricing and improved availability, is a bet that operational discipline can restore like-for-like growth. The company's confidence in offsetting rising energy costs through cost mitigation will be tested as global oil prices remain volatile.

Online surplus retail, as practised by Peeko, operates with a lighter cost base and targets value-driven consumers directly. The model depends on a reliable supply of surplus stock from brands, which can be inconsistent. Huddled's decision to moderate volume while addressing structural issues suggests the supply side is not yet frictionless.

Asset-light marketplace models, exemplified by Debenhams under Boohoo, eliminate inventory risk almost entirely and can scale without proportional cost increases. Gross margins of 53.5 per cent are notably higher than those typical in physical retail. The risk sits in customer acquisition costs and the challenge of building brand loyalty without a physical presence, particularly for a brand whose heritage was built on the high street.

For operators running consumer-facing businesses, the practical questions are immediate. Physical retailers face a cost base that is rising faster than revenue. Digital-only models offer margin advantages but require sustained investment in logistics and customer acquisition. The Vanquis data suggests the consumer squeeze is not easing; nearly a third of households are already using credit for essentials.

The next set of data points will come from B&M's first-quarter trading update and from whether Huddled can convert Peeko's 86,000 quarterly orders into a growth trajectory. Boohoo's claim that Q1 represents an "inflection point" for Debenhams will need several more quarters of evidence.

UK retail is not contracting. It is reorganising. The question for operators is not whether physical or digital wins outright, but which cost structures remain viable when household budgets are under sustained pressure.