Footasylum shares plummet after earnings and sales alert
Shares tumbled 46% after the chain said earnings would grow at a more ‘modest’ pace, while revealing a hit to recent trading.
Premium sports retailer Footasylum has seen its stock market value nearly halved after warning over annual earnings and revealing a recent sales slowdown.
Shares in the recently-floated group plummeted 46% after it said plans to ramp up investment in its stores and website was set to see more “modest” underlying earnings growth in the new financial year.
It also spooked investors by revealing that recent trading has come under pressure amid wider woes on the high street.
The group’s alerts added to another dire day for retail, as department store chain Debenhams warned over profits for the third time this year.
Shares tumbled across the sector, with Debenhams down 12% and FTSE 100 rivals Next and Marks & Spencer also in the red as the warnings prompted fresh fears for the health of Britain’s retailers.
Footasylum sought to reassure investors that its growth plans would keep the group on track, while helping drive strong sales growth for the year.
But chief executive Clare Nesbitt said: “While our core target market of the 16 to 24-year-old consumer has proved to be comparatively resilient in a downturn, our trading since the beginning of the new financial year has undoubtedly been impacted by the widely-documented weak consumer sentiment on the high street.”
She added that planned moves to open more stores, expand others and invest online “will have an associated increase in both expected capital expenditure and property costs for the current year and, as a result, we now anticipate that, adjusted EBITDA (underlying earnings) for full-year 2018-19 is likely to show more modest growth than in full-year 2017-18”.
The warnings overshadowed an otherwise robust maiden set of annual results since floating on London’s junior AIM market last November, with underlying pre-tax profits up 4% to £8.4 million for the year to February 24.
Revenues jumped 33% to £194.8 million, thanks to a 41% jump in online sales, which now account for 30% of total sales.
Adjusted earnings lifted 12% to £12.5 million, but bottom-line profits fell to £1.9 million from £8.1 million the previous year largely due to flotation costs.
Footasylum is looking to grow its chain from 65 stores currently to around 150 in the UK, adding up to eight new shops a year, while also expanding outlets in key locations.
The group is also boosting its online offering, with the aim of 50% of total turnover coming from online and wholesale revenues.
Retail experts at Liberum said: “Footasylum remains a high growth business, is investing wisely and the story remains very much intact, though it is clearlly disappointing to be cutting numbers.”