Exit for B+M chief as market warned of profit drop
Alex Russo is to leave his position as chief executive of discount retailer B+M as the company issued a profit warning to the market this morning.
On Friday afternoon B+M shares plunged to 290p, demonstrating an alarming crash in value over the course of a turbulent year. In the end of February 2024 the shares were trading at 500p.
By 10am this morning shares had fallen further to 268p. by 11:30 it was the biggest faller on the FTSE 250.
The market was told this morning that a trading update at the end of April 2025 will likely reveal profits in the range of £605m to £625m, which the Liverpool-headquartered company said 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”.
Previous market guidance said to expect EBITDA of between £620m-£660m.
On the departure of the CEO, this morning’s statement said the board is “in the advanced stages of a recruitment process” to appoint a new CEO with the support of a leading executive search firm and described it as Russo has “advised the board of his intention to retire.”
Tiffany Hall, Chair of the Board, said: “I would like to thank Alex for his commitment, energy, dedication and hard work since joining the business in 2020 and, in particular, since becoming CEO in September 2022. 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.”
Alex Russo said: “I have thoroughly enjoyed my time at B&M since joining in 2020. 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 £2.0 billion 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.”
The board have also said that Russo will be eligible for an annual bonus for the current financial year and will retain his awards under the company’s share plans.
Analysts at Panmure Liberum have been quick to point out that his departure and the profit warning are related.
A note authored by analyst Wayne Brown said: “The retirement of Alex Russo and a downgrade are unlikely to be mutually exclusive events. The performance of B&M has been disappointing for the past year, but we were hopeful that things were turning and momentum in the first quarter was going to ensure EBITDA consensus guidance of £620m to £650m was going to be met in FY25. This has now been downgraded to £605m to £625m.”
The note added: “The departure of the CEO and long-standing Bobby Arora in the same year may be a concern for some.”
Russ Mould, analyst at AJ Bell also said Russo’s departure was a response to the market losing faith in the business.
“Time has run out for Alex Russo to get B&M back on track. He was meant to have steered the discount retailer to greater things since becoming CEO in September 2022, yet an approximate 9% share price decline over those two and a half years tells a different story.
“The market has lost faith in the business amid a slowdown in growth over multiple consecutive quarters. Someone had to take the blame and it’s inevitable that the CEO falls on their sword.
“Russo’s exit is framed as retirement, yet the lack of a successor and a mere two-month lead time until departure imply a different story.
“The energy has disappeared from B&M precisely at a time when it should have been thriving. The discount retail sector is highly competitive and B&M needs to do something different to get back on top.
“Consumers continue to feel the strain of higher interest rates and they’re watching every penny. As a value retailer, B&M should have been hoovering up new customers left, right and centre as they trade down from more expensive shops. It should have also enjoyed a purple patch as lower income households rely on the brand for affordable goods. Instead, the wheels seem to have come off the wagon.
“It suggests that Russo was too aggressive with earnings guidance and committed the cardinal sin of over-promising and under-delivering, and/or marketing tactics haven’t been good enough to convince shoppers they need to choose B&M.”
