Footasylum has issued another profit warning despite sales rising, following a shock profit warning at its maiden results.
The youth-oriented sports retailer said that it expected to report a small adjusted EBITDA loss for the six months to August 25, 2018 “reflecting a lower gross margin and higher costs from investment in the company’s operations”.
This fresh profit warning cements the retailer’s fall from grace. It floated at 164p per share when it listed in November. That has now fallen to 84p.
The retailer attributed the warning to lower-than-expected revenue growth and the accompanying decline in margin due to clearance activity in-store.
EBITDA is now expected to be “significantly lower” than previously guided, with EBITDA less than half of the 2018 adjusted EBITDA of £12.5m, a sum which itself prompted a profit warning.
Over the six months to August 25, sales rose 18.5% to £98.6m. Store sales grew 12.4%, which the retailer termed “disappointing”. It added that the dampened growth had been “exacerbated by some unforeseen delays in new store openings and upsizes”.
Online sales shot up 28.5% and accounted for 30.6% of total revenue. Wholesale revenue tripled to £2.1m.
The retailer said it had performed well in May and June but that July and August were “more challenging”. This, it said, combined with “there being no sign of a recovery in the short term on the high street”, led to its decision to warn on profits.
Executive chairman Barry Brown 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.
“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.
“Despite the challenging outlook, we are encouraged by the continuing progress that we are making in improving our online performance, rolling out our store opening programme, and further enhancing our supplier relationships, and therefore remain confident in the company’s long-term prospects.”