Footasylum warns on profit
Footasylum has reported an 18.5% increase in revenue to £98.6million in the first half of its financial year but has warned that its full year EBITDA will be “considerably lower” than its previous guidance.
Store revenue climbed by 12.4% to £66.3 million in the six months to 25 August as online revenue rose by 28.5% to £30.2 million to account for 30.6% of sales. Meanwhile, wholesale revenue trebled in the period to £2.1 million.
However, the retailer said it expects to report a small adjusted EBITDA loss for the six months due to a lower gross margin and higher costs after investing in its operations. It also incurred over £2 million of exceptional income due to the early termination of a lease on one its Birmingham stores.
In June Footasylum warned that profit growth for the full year would be more modest than in the previous year.
In a statement today, the company said its store performance during July and August was "more challenging". This has led the board to reassess its overall expectations for the rest of the financial year.
While its online and wholesale revenue have continued to perform well, store sales have been disappointing which has been exacerbated by unforeseen delays in some of the company's new store openings and upsizes.
Footasylum has now warned that revenue growth for the full year is likely to be below current market expectations. As a result of this and a lower overall gross margin from an increased level of clearance activity in stores, it now expects adjusted EBITDA for the full year to be significantly lower than previous guidance, at less than half of last year’s adjusted EBITDA of £12.5 million.
Barry Bown, executive chairman of Footasylum, said: "These are undoubtedly challenging times in the retail industry and, in common with many other businesses, Footasylum's trading has continued to be impacted by weak consumer sentiment.
“On top of that, increased clearance in stores has led to a reduction in gross margin, and we have also had some unforeseen delays in our new store openings and upsizes.
“However, we have continued our programme of investment, both in upsizing our stores and in our digital capabilities and are working hard on a number of initiatives to maximise the company's performance during the upcoming peak trading period.”
At the end of the period, Footasylum had 66 stores in the UK of which 64 were the core Footasylum fascia.
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