BM cuts profit guidance after accounting error, CFO to step down

On Monday, October 20, BM, a London-listed discount retailer, said a software-related accounting error had resulted in £7 million of overseas freight costs being misrecorded, prompting a cut to its profit guidance for the second time in a month and the surprise announcement that its finance director will step down. The company said the error was linked to an operating system update earlier this year, and that the underlying issue has been corrected but will nonetheless reduce reported earnings for the current financial year.

BM said adjusted earnings for the half year to September are now expected to be about £191 million, down from a prior estimate of £198 million. Full-year group adjusted earnings guidance has been lowered to a range of £470 million to £520 million from a previous £510 million to £560 million. The group said it will commission a comprehensive third-party review into how the error occurred.

Chief financial officer Mike Schmidt told the company he intends to step down, and will remain in post until a successor is appointed. In a brief statement, the board said, "The board wishes Mike well for the future." The company has begun a search for a new finance director.