Marks Electrical (Financials)
Financial overview
- Group sales increased by 21.5% to £97.8m in FY2022, up from £80.5m in FY2021
- Gross profit rose 19.3% to £19.0m in FY2022, but gross margin dipped slightly to 19.4%
- Group pre-tax profit in FY2022 amounted to £6.4m, representing a significant 70.6% increase compared to the £3.8m reported in FY2021, with margin strengthening from 4.7% to 6.5%
Since its IPO in FY2021, the group has transitioned from Companies House reporting to annual reports on its corporate website. As a result, measures from previous years may differ from those in FY2021 and FY2022.
Marks Electrical generates revenue by selling directly to consumers through its website and head office showroom as well as telesales.
In FY2022, online accounted for 75% of total sales, down from 80% the year before, with telesales contributing the remaining 25% (20% in FY2021).
The group is entirely focused on its UK operations.
Marks Electrical’s group sales soared by 21.5% to £97.8m in the year to 31 March 2023 (FY2022) - a strong performance despite persistent inflation and rising interest rates.
Growth was strong across all categories, including A-rated energy-efficient washing machines, tumble dryers, premium range cookers, and small appliances such as air fryers and coffee machines.
In FY2021, total sales amounted to £80.5m, reflecting a robust growth rate of 43.8% compared to FY2020.
Gross profit for FY2022 reached £19.0m, marking a 19.3% increase from the £15.9m reported in FY2021, although margin dipped slightly from 19.8% to 19.4%. The retailer attributed the marginal decline to increased fuel costs, distribution wages, and interchange charges.
Marks Electrical reported a pre-tax gain of £6.4m in FY2022, up 70.6% compared to FY2021, and lifting pre-tax profit margin by nearly two full points to 6.5%. This improvement reflected exceptional costs related to the IPO, finance income received, and a higher gain on the group’s investment in Combined Independents (Holdings) Limited.
According to the group’s analysis of GfK Market Intelligence sales tracking data in Major Domestic Appliances (MDA) and Consumer Electronics (CE), Marks Electrical saw market share gains in FY2022.
Its MDA market share came in at 2.5% in FY2022, up from 2.0% in FY2021, while CE market share edged up from 0.2% to 0.3%.
Marks Electrical’s disciplined approach to margin management, capital allocation, and cash conversion, provides the group with a solid foundation to achieve its financial targets and strategic objectives in the current 2023 financial year.
Ecommerce sales performance
The group’s online sales increased by 13.9% in FY2022, reaching £73.4m, compared to £64.4m in FY2021.
Employees
Marks Electrical employed 228 staff across the group in FY2022.
Sales per group employee averaged at nearly £430,000 during the year, while the staff cost to sales ratio rose marginally to 9.7%.
Current financial year
FY2023
Marks Electrical reported a 16.9% rise in sales to £114.3m in a pre-close statement for the 12 months ended 31 March 2024 (FY2023).
The retailer said it increased market share in the major domestic appliances and consumer electronics markets.
Gross product margin was maintained in the second half “as expected” with the Group achieving an adjusted EBITDA of approximately £5.0m.
Marks Electrical chief executive commented “As explained in our January trading update, in the current trading environment consumers remain highly price-conscious, which given our premium focus, continues to have an adverse impact on our average order value, resulting in customer order volumes growing faster than revenue. This impact will limit our ability for margin expansion in the short-term, when taking into account the relatively fixed cost of delivery.
“Despite this, we are very pleased with the growth in our order volumes and new customer acquisitions during the period and the strong growth we have seen in early April, giving us confidence that our fundamental strategy of continued profitable market share gains and excellent customer service will help us in delivering further growth.”
Marks Electrical will post its full year results for FY2023 at the end of June 2024.
H1 FY2023
For the six months ended 30 September 2023 (H1 FY2023), Marks Electrical reported revenue growth of 24.8% to £53.9m (up from £43.1m in H1 FY2022).
Its premium next-day service offerings with installation services saw “rapid growth” as it achieved more than 7,000 installation orders in the first half of the year, compared with 2,500 in the same period last year.
The group also noted “robust performance” across product category sales, with a 71% increase in televisions, 74% in washer-dryers, and 36% in fridge-freezers.
Forecast
Chief Executive Mark Smithson believes the retailer’s strong forward momentum will continue into FY2024, driven by ongoing market share gains.
Retail Navigator forecasts a positive outlook for Marks Electrical, anticipating improved sales and profitability, with total sales projected to reach £160m by FY2027.
