Marks Electrical Group, the Leicester-based online electrical retailer, has hailed strong revenue growth, but warned of gross product margin not increasing to levels expected, impacting full year profit guidance.
According to a trading update for the nine months ended 31 December 2023, the firm saw revenue growth of 22% to £88.9m, up from £72.9m in the same period last year, and increased market share in the Major Domestic Appliances and Consumer Electronics markets.
In a challenging trading environment where consumers remain highly price-conscious, however, Marks said: “gross product margin did not increase to the levels we expected, and despite proactive action on other controllable costs, the impact of this in the peak trading period has had a material impact on our full year profit guidance.”
As a result, the business now expects full year revenue to be in the range of £115-118m with EBITDA in the range of £5-6m. Marks added: “Going forward, we expect to see continued revenue growth in-line with our expectations, but remain cautious on the speed of recovery in consumer buying patterns, which we expect to temporarily impact the recovery of our gross product margin.”
Mark Smithson, Chief Executive Officer, said: “I continue to remain proud of the entire team at Marks Electrical for delivering a record peak trading period whilst gaining market share and maintaining our industry leading Trustpilot score of 4.8. This further demonstrates the strength and attractiveness of our market-leading customer offering and as brand awareness improves, we continue to see a strong repeat customer rate.
“Whilst I am personally frustrated about our expected margin progression in the second half, I remain confident about our long-term growth prospects and continue to be impressed by our ability to deliver market share gains profitably, against a fiercely competitive backdrop, whilst maintaining the highest levels of customer service standards in the industry.
“As we work tirelessly as a team to enhance our gross product margin in the remaining months of FY24 and into FY25, I also know from 37 years of trading that margin fluctuations are inevitable, they present us with an opportunity to learn, and will ultimately enable the Group to deliver long-term value creation and position us as the UK’s leading premium electrical retailer.”
