Dive Brief:

• U.K.-based B&M European Value Retail on Monday said its CFO is stepping down as the company revealed it did not correctly recognize about £7 million ($9.39 million) of overseas freight costs in its cost of goods sold, resulting in a “material” impact on its fiscal year 2026 outlook. 
• Mike Schmidt, the discount retailer’s finance chief since 2022, told the board he plans to step down from his post though he will stay with the company until “a replacement is in place to ensure an orderly transition,” the company said in its release.
• The retailer said it plans to launch a “third-party review of the matter,” noting that the error occurred after an operating system update earlier this year and saying that the underlying system issue had been “resolved.”

Dive Insight:

Shares of the company, which did not respond to a request for comment, fell about 22.75% Monday on the news.

Schmidt has been CFO of B&M since October of 2022, joining from the publicly held home furniture retailer DFS, where he spent nearly nine years including his last three as CFO, according to his LinkedIn account. Earlier in his career he also worked for such banks as UBS, Nomura and Citigroup.

The news from the discount retailer, which imports a variety of products from Asia ranging from toys to garden furniture, raised concerns among analysts at Shore Capital that the company was operating at a lower than expected gross margin, The Financial Times reported.  

The company on Monday reduced its outlook for FY 2026 based on revised Q2 margin run rates with the group’s adjusted EBITDA now expected to be in the range between £470 million - £520 million for FY26, compared to the previous estimate of £510 million - £560 million, according to the release. 

The revisions come about two weeks after the company reported results for fiscal 2026 H1 ended Sept. 27, with B&M saying Monday that it identified the problem after its Oct. 7 announcements. 

Earlier this month CEO Tjeerd Jegen, who joined B&M in June, outlined a turnaround plan. In a statement in the Oct. 7 company release, Jegen said a comprehensive review of B&M’s operations led the company to conclude that its “operational execution has been weak” and set back its performance. He outlined a new plan dubbed “Back to B&M Basics” focused on returning to growth. 

“We have already sharpened our price position, and we are moving with pace to refocus our ranges, improve on-shelf availability and bring back excitement to our stores. We have more work to do, but we are confident these changes will restore consistent like-for-like sales growth over time,” Jegen said in the release.  

As part of the new program, company executives on an Oct. 7 earnings call said they aim to be more disciplined in such ways as offering fewer items in terms of stock keeping units, or SKUs, and staying focused on cost even as it invests in technology to support analytics. 

Asked by an analyst on the earnings call about any missing analytical tools that would increase B&M’s efficiency, Schmidt agreed some targeted tech spending was needed to support stores but struck a cautious tone. “Though this is a business that is very focused in terms of the technology that we introduce...we do have discipline on any area of spend as a low-cost retailer,” he said.