LONDON (Alliance News) - Fishing tackle retailer Fishing Republic PLC's shares slumped in early trade on Thursday after it cut its profit forecast for 2016 due to a ramp up in investment and said sales activity had slowed in July and August.
Shares in the company were down 21% on Thursday morning to 32.00 pence, one of the worst performers in the AIM All-Share.
Fishing Republic said that due to its strong balance sheet, boosted by a GBP3.75 million fundraising in June, it has rebased its profit expectations for 2016 in order to allow it to invest more in its store network and online operations. It anticipates the benefits of this move will flow through in 2017.
In addition, the company said trading in July and August had softened, though trading in September so far had been "encouraging".
In the first half to the end of June, Fishing Republic made a pretax profit of GBP157,000, swung from a GBP150,000 loss, partly due to lower one-off costs but also as revenue rose 34% to GBP2.5 million from GBP1.9 million.
The group opened two new stores, in South Birmingham and Crew, and relocated its Hull store in the first half. Like-for-like store sales, excluding the new openings, grew 16%.
"With the planned opening of two further stores before the year end, additional investment in our recent acquisition and the increase in resource across key areas, including multi-channel, the group's cost base will rise significantly in the current financial year. This, coupled with lower than expected sales during the latter part of the summer season, means our results for this financial year are now anticipated to be below current market expectations," said Chairman James Newman.
"However, we believe that the benefits of our accelerated investment in both online and across the store network will begin to flow through in 2017 and continue to view the group's growth prospects very positively," he added.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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