FOOT.L Share News (FOOT)

(Sharecast News) - Footasylum shares tanked on Monday as the company warned that adjusted earnings for the year will be "significantly lower" than previous guidance following a challenging July and August and amid no sign of recovery on the high street.In an update for the six months to 25 August, the retailer said it expects to report an 18.5% jump in revenue to £98.6m. The company said store revenue was up 12.4% to £66.3m, online revenue grew 28.5% to £30.2m and wholesale revenue trebled to £2.1m.However, Footasylum expects to report a small adjusted earnings before interest, taxes, depreciation and amortisation loss for the period due to a lower gross margin and higher costs from investment in the company's operations. In addition, it will report more than £2m of exceptional income from the early termination of the lease one of its Birmingham stores.While the company's performance in May and June was positive, store performance in July and August was more challenging, with no sign of a short-term recovery on the high street, exacerbated by delays in new store openings and upsizes.As a result, the group now expects adjusted EBITDA for the full year to be down significantly on the year before at less than half the FY18 adjusted EBITDA of £12.5m.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. On top of that, increased clearance in stores has led to a reduction in gross margin, and we have also had some unforeseen delays in our new store openings and upsizes. 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."Russ Mould, investment director at AJ Bell, said the strong start the retailer made after its November 2017 IPO now feels like an awfully long time ago."Management's argument that its core, fashion-conscious 16-to-24-year-old demographic would continue to spend on trainers and t-shirts whatever the economic backdrop has been heavily undermined."The business has also not helped itself, pointing to unforeseen delays in new store openings and upsizing of existing outlets. Ultimately it is questionable whether investors will still share management's continuing confidence in the 'long-term prospects' of the group."Meanwhile, Liberum said the second downgrade of the year was "highly disappointing"."The group should hopefully start to see the benefits from some of the initiatives laid out by the executive chairman but these take time to deliver. Until then, visibility on earnings is low and the rest of FY18/19 is likely to be difficult. At 0945 BST, the shares were down 48% to 44p.