- Thursday, April 18, 2024
By: Radhakrishna N S
B&M European Value Retail wrote down the value of its German unit Jawoll and put it under review.
The latest move by the company came as the unit turned into a loss-maker earlier this week.
Jawoll, which was acquired by the B&M in 2014, recorded a 3.2 per cent rise in sales but fell to a loss of £12.2 million, in the first half of its financial year.
Shares in B&M were moved down earlier week over seven per cent, paring gains for 2019 to 24.3 per cent.
The performance in Germany overshadowed a firm first half from its main British business.
The Indian-origin Simon Arora-led company has 98 stores in Germany, primarily operating under the Jawoll brand.
B&M trades from 645 stores in the UK operating under the B&M brand and 290 stores under the Heron Foods and B&M Express brands.
B&M’s overall pretax profit moved down by 70.5 per cent to £32.2m, which included an impairment charge of £59.5m relating to its German unit, the company said in its financial report for its first half ended in September.
Arora, B&M’s chief executive, blamed the company’s German team, which had ordered higher stock while trading at the Jawoll chain remained weak.
About 50 per cent of Jawoll’s £12m losses were due to an increase in warehouse and transport costs.
The group’s latest setback is a rare negative development for the Liverpool-based B&M.
Arora, 49, started his business in 1995 supplying low price products from Asia to retailers before acquiring B&M in 2004, which is valued at £3.5 billion.
B&M makes 86 per cent of its sales from its British stores, where sales rose by 13.8 per cent.
The Asian-origin top executive of the business said that he was moving ahead with plans to raise the number of stores from 645 to 950.
