B&M FY26 Results: Profits Fall as 'Back to Basics' Plan Begins to Take Hold

B&M FY26 results: profit slump, flat UK like-for-like sales and an early Back to Basics recovery

B&M’s FY26 numbers are a mixed bag, and the headline is simple enough: sales went up, but profits fell sharply. Group revenue rose 3.6% to £5,775m, yet adjusted EBITDA (pre-IFRS 16) dropped 25.9% to £459m and adjusted profit before tax fell 37.7% to £284m.

That tells you the real issue was not demand alone. It was weaker trading margins, higher operating costs and some plain old execution problems in the core UK business. Management has spent the second half trying to fix that through its “Back to B&M Basics” plan.

Key FY26 numbers	FY26	FY25	Change
Group revenue	£5,775m	£5,571m	3.6%
Adjusted EBITDA (pre-IFRS 16)	£459m	£620m	(25.9)%
Adjusted profit before tax	£284m	£455m	(37.7)%
Adjusted diluted EPS	21.3p	33.5p	(36.4)%
Post-tax free cash flow	£321m	£311m	3.0%
Net debt	£656m	£781m	(15.9)%
Ordinary dividend	9.6p	15.0p	(36.0)%

One important detail here: the company says profits landed at the midpoint of current guidance, but the actual guidance range is not disclosed in this announcement. So investors are being told it hit expectations, just without the full ruler shown on the page.

B&M UK performance: flat like-for-like sales hide improving execution in the second half

The core B&M UK business still looks like the main repair job. Total sales rose 2.9% to £4,615m, but like-for-like sales – a measure comparing established stores with established stores – were down 0.1%.

That is not great, but it is a lot better than the sort of number that would suggest the business is still drifting. In Q4, B&M UK like-for-like sales actually edged up 0.1%, and management says FMCG – fast-moving consumer goods such as groceries and household staples – improved through the year.

The “Back to B&M Basics” plan seems focused on four very practical retail levers:

• sharper pricing on key FMCG lines
• better in-store promotions
• leaner ranges through SKU reductions – stock keeping units, or product lines
• better on-shelf availability

On that last point, there is a genuinely encouraging number. On-shelf availability in key brands improved from 86% in H1 FY26 to 93% in H2 FY26. That might sound dull, but for a discount retailer it matters a lot. If customers cannot find the basics, they simply stop trusting the shop.

My read is that B&M has identified the right problems. The challenge now is proving those fixes can drive sustained like-for-like growth, not just stabilisation.

B&M France growth and Heron Foods weakness: two very different stories inside the group

France was the clear bright spot. B&M France grew revenue 13.4% to £616m, delivered like-for-like sales growth of 2.9%, opened 12 new stores and increased its discount market share to 8.4% from 8.1%.

Adjusted EBITDA (pre-IFRS 16) in France rose to £53m from £48m. Margin slipped slightly to 8.7% from 8.8%, but that is hardly a concern given the sales momentum. This part of the group looks healthy and still has expansion runway.

Heron Foods was the weak link. Revenue dipped 0.3% to £544m, while adjusted EBITDA (pre-IFRS 16) almost halved to £16m from £30m. The margin fell to 2.9% from 5.5%.

That is a thin margin for a food retail business already dealing with cost inflation. Management says Heron has made a positive start to FY27, but FY26 shows it still needs work on ranging, merchandising and overall sales productivity.

B&M profit margins and cost inflation: why revenue growth did not reach the bottom line

The profit damage here is pretty severe. Group adjusted EBITDA margin fell to 8.0% from 11.1%, a decline of 317 basis points, with one basis point being one hundredth of a percentage point.

In B&M UK specifically, adjusted EBITDA (pre-IFRS 16) fell to £395m from £545m and margin dropped to 8.6% from 12.2%. That is the clearest sign that the UK business lost some of its commercial sharpness.

Costs were a big part of the problem. B&M called out higher National Minimum Wage, increased National Insurance contributions and the Extended Producer Responsibility levy. It also flagged ongoing pressure from international freight, domestic distribution and energy costs, linked to the conflict in the Middle East.

Statutory profit before tax fell even harder, down 47.3% to £227m, partly because of £57m of adjusting items. The biggest of those was a £36m impairment charge on store leases and fixed assets, reflecting lower profitability across the estate. That is not a number to ignore – it tells you some stores are worth less on paper because trading has weakened.

B&M cash flow, debt and dividend: the balance sheet gives investors some comfort

Here is the positive counterweight. Cash generation remained strong, with post-tax free cash flow up to £321m from £311m and cash generated from operations at £801m.

That strength came partly from tighter inventory management. Stock fell to £849m from £883m after accelerated clearance activity and range refocusing. In plain English, B&M sold through weaker lines, cleared clutter and turned that into cash.

Net debt fell to £656m from £781m, while leverage was 1.4x on a net debt to adjusted EBITDA basis, back inside the group’s 1.0x to 1.5x target range. That matters because it gives management breathing room while it invests in the turnaround.

The dividend, though, has been cut hard. Ordinary dividends for FY26 total 9.6p, down from 15.0p. That is disappointing for income investors, but it is also sensible capital allocation in a year when profits have fallen this sharply.

The Jersey redomicile also matters more than it might first appear. Management says it simplifies administration and gives greater flexibility on shareholder returns, including buybacks when excess cash is available. That is not an immediate catalyst, but it could matter later if trading improves.

B&M FY27 outlook: investment year, no full guidance yet and a lot riding on UK recovery

Management is calling FY27 a year of investment, which sounds fair. The company is balancing store openings with investment in store formats, refresh plans and operational improvements under Phase 2 of its strategy.

There are some decent early trading comments. B&M UK had a slow start to the garden season because the weather comparison was tough, but late May improved seasonal sales. France has started FY27 well, and Heron’s like-for-like sales have also started positively.

One thing to note for investors: from FY27, B&M will shift its financial guidance metric from adjusted EBITDA to adjusted profit before tax. That makes comparison with UK peers easier, and frankly it is a more investor-friendly measure because it captures more of the real cost base.

There is no FY27 profit guidance disclosed here. What we do get is management confidence that cost mitigation can offset rising energy-related pressures, and a medium-term claim that B&M UK can return to double-digit EBITDA margins.

That is possible, but it is not a free pass. For me, the investment case now rests on one central question: can B&M turn better execution into real UK like-for-like sales growth without wrecking margin? FY26 suggests the decline has been arrested. FY27 needs to prove the recovery is real.

What B&M FY26 results mean for retail investors

This was a weak profit year, no dressing it up. But it was not a balance sheet blow-up, and it was not a sales collapse either. It looks more like a retailer that lost discipline, recognised it, and is now trying to rebuild the basics.

That makes the update mildly encouraging rather than outright bullish. France is performing well, cash flow is solid, debt is moving the right way and UK trading trends improved through the year. But until B&M UK delivers clearly positive like-for-like sales and better margin control, investors are still being asked to buy into a recovery story rather than enjoy a finished one.