B&M has reduced its profit expectations for the second time in its current financial year, despite recording 2.9% year-on-year revenue growth in the third quarter.

The FTSE 250 variety store’s UK division delivered a 1.9% year-on-year increase in Q3 revenue, which was supported by 3% growth in December, following low single-digit declines in October and November.

B&M also said that early January trading in its UK brand has seen a positive continuation of its like-for-like (LFL) trend, with a good customer response to its clearance events across seasonal ranges and discontinued lines.

Its Heron Foods brand also recorded 1.4% revenue growth, although its profit performance was below its expectations. As a result, a review of its customer proposition is being conducted.

B&M stated that its ‘Back to B&M Basics’ programme continues to move forward, results for the first three fast-moving consumer goods (FMCG) category pilots, which aim to reduce line count, have informed a further four trials, which will start next month ahead of a rollout to its entire UK estate in Q1 2027. This is expected to improve the quality of its stock records.

Furthermore, the retailer said that a review by EY into its IT systems and balance sheet controls that resulted in its overseas freight costs systems issue had now completed, and that it would implement the report’s recommendations.

Chief executive officer at B&M, Tjeerd Jegen, stated: "Price investment has continued, particularly in FMCG, and while the full benefits will take time to come through, I am encouraged by the early signs of LFL sales growth at B&M UK late in the quarter.

"As we progress Back to B&M Basics, we are identifying opportunities to make deeper investments in clearing discontinued lines to support planned reductions in SKU count and to clean up stock as we restore on-shelf availability towards industry benchmarks. As with our pricing actions, these are investments in the long-term strength of B&M, but they do impact near-term financial performance."

In line with the results, B&M has lowered its profit expectations from a previous range of £470m-520m to between £440m-£475m.

The firm said that this downward movement in range is driven by ongoing investments in pricing and clearance, improvements in stock quality and the financial underperformance of Heron Foods.

However, it did remain confident that its actions can restore LFL growth in B&M UK in the next 12 to 18 months to ensure future group growth.

Investment director at AJ Bell, Russ Mould, said the latest update has kept B&M’s share price on its knees, after falling by over 45% in the last year.

He concluded: "The company talked about early signs of recovery, yet it is plagued by unsold goods that are taking up valuable space. It is slashing prices to get rid of these items, which is a headwind for profit margins. Heron Foods continues to limp along, and B&M is reviewing the business to find ways to better chime with customers.

"Ultimately, B&M remains in a state of flux while it tries to rearrange the furniture and get itself in a better position to mount a proper comeback. Investors show little faith judging by ongoing share price weakness."

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