B&M Announces Departure Of CEO After Cutting Profit Guidance

Discount retailer B&M issued another profit warning today due to tough trading conditions, while announcing that its Chief Executive Alex Russo would step down after two and a half years in the role.

Just weeks after it narrowed its profit view following a disappointing Christmas period, B&M said today that its adjusted EBITDA was now expected to be in the range of £605m to £625m – down from the previous estimate of £620m to £650m.

The company stated that the lower forecast “reflects the current trading performance of the business, an uncertain economic outlook and the potential impact of exchange rate volatility on the valuation of our stock and creditor balances, which is a non-cash item.”

In recent months, most of the UK’s major retailers have warned of a tough year ahead due to the continued cost of living crisis and the government’s decision to raise employer national insurance contributions, which is expected to lead to job cuts and higher prices.

Amid the rapid expansion of its store estate, B&M has looked to increase the number of items it sells and leaned on its competitive pricing to counter consumer caution. However, its like-for-like sales slid 2.8% over the key Christmas period, which was the chain’s third successive quarter of decline as cautious consumers reined in their spending.

Russo, who has held the top job since September 2022 and was earlier its finance chief, will retire at the end of April. B&M said it was in the advanced stages of a recruitment process to appoint a new CEO and will provide an update in due course.

Analysts at Jefferies said the management change was of “limited surprise” and noted that the profit warning indicated that an improved December/January like-for-like trend that B&M highlighted last month had not been sustained.

Tiffany Hall, Chair of B&M’s Board, commented: “Alex has increased our store footprint in both UK and France and driven a relentless focus on high operational standards and low costs, enabling the company to provide great products and everyday low prices to our customers whilst generating continued strong cash returns for our shareholders. We wish him well for the future.”

Russo added: “The business has been successfully steered through the pandemic years and is now larger and stronger, with group revenues increasing by almost 50% and cash distributions to shareholders in excess of £2.0bn during my tenure. It has been professionally rewarding to assemble and work with a high-quality leadership team and to retire leaving growing businesses with great potential in both UK and France. I wish the Board and the leadership team every success in the years ahead.”

NamNews Implications:

• To non-City eyes, a 2.5% drop in anticipated EBITDA seems trivial.
• But always good to manage expectations…
• Meanwhile, B&M is still worth a supplier-bet…
• …given its business model is better than most, for uncertain times.

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Asda Avoids Fine Despite Missing The Deadline For IT Upgrade

Asda has avoided a hefty penalty charge despite missing a target for separating its IT systems from former owner Walmart.

According to The Telegraph, the US retail giant has agreed to push back the deadline for the £800m project, which has seen Asda untangling thousands of programs responsible for checkouts, administration and payroll.

After being acquired by TDR Capital and the Issa brothers in early 2021, Asda had been aiming to complete the IT changeover, named Project Future, by February this year. Last month, industry sources warned that Asda risked millions of pounds worth of charges if it missed this target.

The Telegraph reported over the weekend that Walmart and Asda have now come to a revised agreement, including scrapping the February deadline. It follows a series of setbacks for the project, which had been touted as “mission critical” to Asda’s revival plans.

A spokesperson for Asda told the newspaper: “We continue to make good progress delivering Project Future and have successfully migrated large parts of our business to brand-new systems.

“We will continue to take a pragmatic approach when delivering the remainder of the programme, and Walmart continue to be incredibly supportive in every way in helping with the implementation.”

NamNews Implications:

• Meanwhile, given that their IT systems still need adjusting…
• …suppliers (and shoppers) may wonder about the effect on service level…
• …and react accordingly?

Aldi Raises Hourly Rate Again To Maintain Position As ‘Britain’s Best-Paying Supermarket’

Just weeks after announcing that it was increasing its hourly wages, Aldi has raised the rate again. The move comes days after key rival Lidl said it would offer its UK store staff a better rate that would have meant Aldi was no longer Britain’s best-paying supermarket.

From 1st March, Aldi Store Assistants will now be paid at least £12.75 per hour nationally and £14.05 within the M25. On 21 January, the discounter announced a rise to £12.71 nationally and £14.00 within the M25.

The rates exceed the Real Living Wage set by the Living Wage Foundation in October last year, with some staff seeing higher wages based on their length of service.

Aldi has also committed to a further pay increase for store staff from September, taking its minimum rates to £12.85 per hour nationally and £14.16 within the M25.

“This latest increase recognises the important contribution that our colleagues make day in, day out and ensures they are rewarded fully for their contribution with industry-leading pay,” said Giles Hurley, Chief Executive Officer of Aldi UK and Ireland.

“Every member of Team Aldi plays an important role in providing the best products, service and value to the millions of shoppers that visit our stores.”

Aldi revealed yesterday that it plans to invest £67m in upgrading its existing stores during 2025 as part of a programme to improve the shopping experience for its customers.

NamNews Implications:

• Who would have thought?
• Two discounters vying to be the highest retail payer of staff in the UK.
• If the quality of workers follows the rate of pay, then shopfloor motivation will make a difference…
• More reason for retail rivals to watch?
• And begging the question: Can any supplier afford to ignore the discounters?
• (just implying…)

Aldi Improving Health & Beauty Fixtures In Next Phase Of Investment Programme For Existing Stores

Aldi has revealed that it plans to invest £67m in upgrading its existing stores during 2025 as part of a programme to improve the shopping experience for its customers.

The discounter noted that it had spent almost £600m on store upgrades since 2017, and with the first phase of these updates nearly complete, it was moving on to the next stage of its store enhancement programme.

The initial store upgrades focused on creating more space for fresh, chilled, and food-to-go ranges, alongside simpler layouts, improved fixtures and energy-efficient LED lighting.

The new phase will include additional in-store features such as improved bakery and health & beauty fixtures for customers. Stores will also benefit from CO2 refrigeration upgrades, contributing to an estimated reduction in carbon emissions equivalent to heating over 6,500 homes when the programme is complete.

“Aldi’s £67m investment is a major step forward in our commitment to delivering an even better shopping experience for our customers across Britain,” said Jonathan Neale, Managing Director of National Real Estate at Aldi UK.

“Building on the success of our previous upgrades, we’re enhancing store layouts as part of our dedication to providing customers with more sustainable stores, convenience and an improved shopping experience nationwide.”

As well as store improvements, Aldi is investing approximately £650m in new openings across the UK in 2025, with a target of around 30 additional sites.

NamNews Implications:

• Aldi appears to be addressing possible negatives.
• Whilst making improvements in the estate.
• All adding to an improved shopping experience for more shoppers.
• And if their share starts growing again….

Aldi Tops Cheapest Supermarket Ranking Despite Rival’s ‘Loyalty Schemes And Flashy Promotions’

Aldi has again been named as the UK’s cheapest supermarket in a price comparison survey by trade magazine The Grocer.

The study of a basket of 33 everyday items revealed the gap between Aldi and the four largest full-price supermarkets (Tesco, Sainsbury’s, Asda and Morrisons) was 16% on average.

Despite recently announcing the return of its Rollback scheme, Asda only managed fifth place, with its basket checking out at £7.62 more expensive than Aldi’s.

Tesco was found to be 14% (£7.52) more expensive than Aldi, even when loyalty prices are applied, while third-placed Morrisons came out as £7.36 more expensive.

Lidl was in second place, just 16p behind Aldi.

“The latest data confirms that our prices simply can’t be matched and our customers know that the only place to get Aldi prices is by shopping at Aldi,” said Julie Ashfield, Managing Director for Buying at Aldi.

“Other supermarkets can try and compete with us through loyalty schemes and flashy promotions but the only thing on a roll is Aldi, being named the best on price time after time. That’s because our promise to our customers is straightforward and simple – they will make significant savings every time they shop with us.”

NamNews Implications:

• A 16% advantage on average Mults’ prices has to count for many shoppers
• Key for Aldi to give more shoppers access to their outlets
• Hence the importance of their store opening programme…
• Meanwhile key for suppliers to find ways of working with Aldi..?

Asda Trialling Automated Sampling Machine

Asda has begun testing an automated vending machine that offers free samples to customers at its store in Pilsworth, Bury.

In report a report by trade publication The Grocer, the supermarket described the machine as a “first to market innovation” that could “revolutionise in-store sampling”.

To access a free sample, shoppers have to scan their Asda Rewards loyalty app. A screen on the machine also allows customers to browse ingredient and dietary information.

The first brand testing the new machine is Müller, which is offering shoppers free samples of its Frijj milkshake.

A spokesman for Asda told The Grocer: “We are trialling a digital sampling machine at our Pilsworth store so that customers can try newly launched products from our branded partners simply by scanning their Asda Rewards ID.”

Access to the machine is being offered by the supermarket’s retail media arm, LS Eleven Media Services, and aims to help brands “engage customers with dynamic content and product trials”.

NamNews Implications:

• If only Asda was not saddled with other distractions…
• i.e. we have seen some very original ideas coming from this beleaguered grocer…
• Anyway, key for suppliers in appropriate categories to ensure their access to these sampling machines.

Historic Equal Pay Win For Tens Of Thousands Of Asda Workers

Tens of thousands of Asda’s checkout workers, customer service staff and shop floor assistants, most of whom are women, could be in line for historic payouts after the biggest ever private sector equal pay claim.

A court ruling has made clear that many of the roles on Asda’s shop floors, carried out mainly by women, are of “equal value” to the better-paid ones in the supermarket giant’s warehouses, which are predominantly filled by men.

Read the full article on the ITV website

NamNews Implications:

• It appears that this issue is heading towards a conclusion...
• ...that could cost Asda considerable sums in backdated ‘top-ups’ for workers.
• The resulting uncertainties has to add to the current pressures on Asda.
• A speedy resolution in terms of a negotiated settlement and known cost...
• ...could at least move this issue off the table.
•  Allowing the company to focus on its recovery plan?

Morrisons Hails Strongest Quarterly Performance In Four Years

CEO Rami Baitiéh’s turnaround programme at Morrisons appears to be picking up speed after the group delivered its strongest quarter since the start of 2021.

Over the 13 weeks to 27 October, the grocery retailer’s like-for-like sales increased by 4.9%, with total revenues up 4.8% to £3.8bn. The robust fourth-quarter figures meant that annual like-for-likes had grown 4.1% – a marked improvement on the 1.8% rise the previous year.

Full-year underlying EBITDA was up 11.2% to £835m on revenue that increased 3.8% to £15.3bn.

Morrisons noted that it had made good progress in improving product availability, with it up four percentage points on fresh goods. Its revamped More Card loyalty scheme also saw linked sales grow to 68% at the year-end (76% today), whilst its discounter Price Match initiative now covers over 500 everyday items.

Morrisons also highlighted progress on tackling the large debt burden left over from the takeover by CD&R. The group’s debt is now down 40% from its peak, with CFO Jo Goff saying: “A year of broad-based operational progress has helped to deliver a significantly strengthened Morrisons.

We delivered a further £150m of progress on our working capital programme in the year, taking the total since the start of the programme to £450m, and have achieved £312m in our cost-saving programme in the year.”

Other highlights of the Morrisons year included the sale of its petrol forecourts to MFG for £2.5bn and the acquisition of 36 convenience stores in the Channel Islands.

The group’s convenience store estate now stands at over 1,600 stores after rapid growth in recent years.

“This has been a year of urgent reinvigoration and positive progress for Morrisons. Customer transactions increased, market share grew from Q2, and we saw positive switching from our competitors,” said Baitiéh.

He noted that improvements across the business had resulted in “better availability in our stores, sharper prices, more effective promotions and a strong and growing loyalty scheme”, which was now starting to be reflected in its financial performance.

Baitiéh concluded: “I want to thank everyone at Morrisons for their commitment and energy every day and for playing their part in the significantly improved performance that we are reporting today.

"Supermarkets, Convenience, Online, Wholesale and Myton Food Group all contributed to the improving picture, helping us serve our customers better.”

Morrisons did not reveal how it traded over the key Christmas period. However, Kantar data released earlier this month suggested the chain lagged well behind Tesco and Sainsbury’s.

NamNews Implications:

• Latest stats looking good
• Lowering the debt burden means reduced pressure on debt servicing...
• Is it time for suppliers to join with Morrisons newfound optimism?
• (despite a probable Christmas lag vs Rivals?)