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. He is stepping down and the search begins for a replacement.
“Failing to recognise £7 million of freight costs is a major mistake and suggests that the business has poor financial controls.
“It’s inevitable that investors will now start to question if other accounting mistakes have been made.
“The fact a £7 million cost issue has led to a £40 million downgrade to earnings guidance would suggest B&M’s margins are skinnier than some might have thought.
“B&M recently announced a strategy reset and a series of initiatives to get back on top after a rocky period.
“These initiatives read like a beginner’s guide to retailing, begging the question why they weren’t implemented in the first place.
“Now we’ve had financial mistakes on top, so it’s only natural to wonder if the business has well and truly gone off the boil.
“A big share price slump implies that some investors no longer want to hang around to find out.”
Contact details are available to account holders.
Create a free account to get in touch with this expert.