B&M writes off struggling German business Jawoll
The impairment from Jawoll, which has been under pressure despite growing revenue, will cost B&M almost £60 million.
Retailer B&M could abandon its first-ever international market, it revealed on Tuesday, after it was forced to write off its German business Jawoll, taking a major hit to profits.
Profit before tax fell 70.5% to £32.2 million in the first half of the year after it revealed a £59.5 million impairment charge from the German unit.
Chief executive Simon Arora said B&M would now go back to the drawing board to figure out what to do with the struggling business.
“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,” he said.
We are well placed for the golden quarter in our main B&M UK stores business Simon Arora, chief executive
Revenue at the German arm increased 3.2% as it opened 10 new stores, bringing the total to 98. But on a like-for-like basis revenue was “held back”, the company said, without revealing the figures.
The unit’s troubles were compounded as seasonal stock arrived late, and it incurred major costs at a third-party warehouse.
As a result the business has fully impaired the value of the brand, the property and equipment on under-performing stores.
But in the UK, B&M sounded a brighter note as it looked ahead to Christmas.
“We are well placed for the golden quarter in our main B&M UK stores business,” Mr Arora said.
It opened 30 new B&M stores in the UK over the six months, closing only one and relocating four. Total revenue grew 21.6% to £1.9 billion. Like-for-like sales at B&M were up 3.7%.
“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 stores we have opened in the last 12 months.”
The company’s shares fell as much as 11% on Tuesday morning.