Marks Electrical profits and revenues have fallen after the retailer focused on “repositioning its inventory” in the first half, but its chief executive sees signs of recovery after returning to profitability in October.
In its interim results for the six months to September 30, 2025, Marks Electrical reported group revenues of £53m, down 9.9% year on year and adjusted EBITDA of £0.5m, down from £2m in the first half last year.
Boss Mark Smithson said the first half of the new financial year had been “challenging for the business”, which had focused on “repositioning its inventory holdings” during the period, which “temporarily impacted [both] top and bottom-line performance”.
However, with the retailer’s inventory now realigned, Smithson said “the group has returned to revenue growth and improved profitability in October, in line with revised forecasts”.
The retailer ended the period with a debt-free balance sheet, but a reduction in net cash of over £5m to £1.5m, which primarily relates to working capital outflows.
Despite facing challenging conditions, the retailer noted it operates in a £7bn market which presents “substantial growth potential”. Marks Electrical said “with a strong platform and proven model, the group is well positioned to capture market share and improve profitability as market conditions recover”.
Marks Electrical appointed Tom Pallatt as interim chief financial officer during the period, while board member Alyson Fadil announced her intention to step down from the board and will be replaced by Warren Middleton.
Chief executive Mark Smithson said: “The first half of FY26 has been challenging for the business, reflecting a highly competitive market environment combined with continued cost pressures. During the period, the group has focused on repositioning its inventory holdings, as we announced on September 25, 2025, which has temporarily impacted top and bottom-line performance.
“With inventory now realigned, the group has returned to revenue growth and improved profitability in October, in line with revised forecasts. Cost headwinds have arisen from increases in the national minimum wage and national insurance contributions, alongside higher operating costs linked to the implementation of D365. Management has taken proactive measures to mitigate the impact of these increases, and the benefits of these actions are beginning to materialise.
“The operational impact of implementing D365 was initially underestimated. While the new system carries ongoing running costs, the first year of operation caused significant distraction for all users in the business and has also generated additional resource costs due to the learning curve and adaptation required across the business.
“As teams have become more proficient with the system, we have already seen a marked improvement in efficiency and task completion times. Importantly, unlike the legacy platform, D365 provides compatibility with a wide range of third-party applications and AI-enabled tools, allowing the business to integrate future technologies and enhance automation capabilities that were previously constrained. With the platform now stable and performing reliably, we are beginning to introduce automation to drive cost savings and operational efficiencies. Although the benefits have taken longer to realise than initially anticipated, we are now progressing down the improvement curve towards enhanced productivity.
“With revenue and profitability improving in October, we remain confident in our full-year outlook and long-term strategy. I am extremely proud of the dedication and commitment shown by our colleagues over the past year. Despite softer financial results, significant progress has been made behind the scenes to strengthen our foundations. We are building a business for the future, and our focus on delivering best-in-class customer service continues to underpin that ambition.”
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