Discount retailer, B&M has reported a 70% drop in profits from £59.5m to £32.3m during the first half of the year attributed to increased costs at its German Jawoll fascia.
For the 26-week period ending 29 September, the retailer’s group adjusted profit before-tax decreased by 2.8% to £96m in comparison to the same period last year, which sat at £98.8m.
Group revenues increased by 12.4% resulting in £1.76bn made during the period, as well as the B&M UK stores business adjusted EBITDA increasing by 13.7% to £137.3m.
The stores business saw like-for-like sales increase by 3.7%, whilst revenue grew by 13.8%.
The fall in profits was attributed to Jawoll operations in Germany, which was impacted by “distribution issues and weak sales performance” due to an impairment charge of £59.5m.
Simon Aroar, chief executive of B&M said the company delivered “solid overall first half performance” driven by its UK stores, which constitutes 86% of group sales.
He said: “The current crop of new stores also achieved especially strong results. The core business has made a solid start to the second half of the financial year. Heron Foods has continued to grow in the UK and we remain very pleased with the overall progress of that business.
“In Europe, we have seen contrasting performances from Babou in France and Jawoll in Germany. Babou has made good progress with the planned changes to its product offer.”
He added: “The performance of Jawoll has continued to be impacted by trading and operational issues and its financial performance remains disappointing. The Board is carrying out a strategic review of Jawoll in order to determine its future.
“We are well placed for the golden quarter in our main B&M UK stores business. Despite the continued uncertainty in the economic environment generally, we are very proud to say that each of the top five store opening days in our history have all been in the stores we have opened in the last 12 months.”