LONDON (Alliance News) - Shares in Footasylum PLC plunged on Monday as the retailer warned on profit for the 2019 financial year due to weak consumer sentiment and a challenging trading performance.
The stock was trading down 47% at 44.00 pence each, as the retailer became the latest victim of falling footfall on UK high streets leading to "disappointing" sales.
Executive Chairman Barry Bown 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."
The footwear retailer said that, for the year ending February 23, revenue is expected "below current market expectations" with the board guiding for earnings before interest, taxes, depreciation and amortisation to be "significantly lower than previous guidance, at less than half of the financial 2018 adjusted Ebitda of GBP12.5 million".
The company said that it was forced to reassess its overall earnings expectations for the balance of financial 2019 due to challenging trading during July and August and no sign of a trading recovery in the short-term.
Footasylum, however, added that store performance for May and June was positive despite weak consumer sentiment.
For the six months ended August 25, the company expects revenue of GBP98.6 million, 19% higher year-on-year, from GBP83.2 million. Store revenue is predicted to rise by 12% to GBP66.3 million, while online is anticipated to increase 29% to GBP30.2 million. Wholesale revenue is estimated to treble to GBP2.1 million.
Despite the increase in revenue, Footasylum expects to report a "small" adjusted earnings before interest, taxes, depreciation and amortisation loss for the six-month period due lower gross margins and higher operations costs.
The company expects to open six new stores by December, alongside completing further planned upsizes as it believes it "will materially improve Footasylum's existing strong brand relationships while enhancing the consumer experience in store". The investment is estimated to cost the retailer around GBP16 million.