LONDON (Alliance News) - Footasylum PLC on Tuesday warned on lower than expected margins and earnings for 2019 financial year due to heavy discounting in a challenging trading environment.
The trainers and apparel retailer reported revenue growth for the 18 weeks to December 30, however, it explained that the challenging trading conditions reported in the first half of its financial year have continued throughout the key Christmas trading period.
Moreover, UK economic uncertainty and weakening consumer sentiment have led to "some of the most difficult trading conditions seen in recent years".
"Against this market backdrop, promotional activity and discounting across the retail sector were higher than anticipated, with the result that Footasylum's levels of promotional and clearance activity were greater than expected during the period. Consequently, while the company has sustained its revenue growth across all channels, gross margin has been lower than previously expected for the period," Footaslyum explained.
As a result, the company now expects annual gross margins to be lower than consensus expectations and earnings before interest, taxes, depreciation and amortisation to come in "towards the lower end of the current range of analyst forecasts".
During the 18 week period, however, the company saw total revenue up 14% to GBP102.3 million from GBP89.8 million.
The retailer said online sales were up 28% to GBP36.0 million from GBP28.1 million now accounting for 33% of total revenue.
Stores revenue increased 5% to GBP63.7 million, despite challenging UK high street trading conditions, the footwear retailer said. Wholesale revenue doubled to GBP2.6 million from GBP1.3 million.
Ahead of Christmas the company opened five new stores and completed three upsizes. It now operates from 70 stores in the UK.
The company will announce its results for the year ending February 23 on May 21.