LONDON (Alliance News) - Victoria PLC on Monday said it expects to see a significant improvement in its annual earnings, despite taking a hit on margins from its strategy to increase market share.
Shares in the company fell 13% to 375.00 pence each in early morning trade.
The floorcovering and carpet retailer expects earnings before interest, taxes, depreciation and amortisation for the year ending March between GBP95 to GBP97 million. Last year, Ebitda was GBP64.7 million.
Adjusted pretax profit is expected to be around 35% to 39% higher than GBP40.8 million recorded in the prior financial year, benefiting from 8 months of trading of recently acquired tiles business Ceramica Saloni.
"In the group's interim results released in November, Victoria advised it was taking advantage of difficult market conditions to actively pursue market share. The board recognises this approach, which impacted earnings this year, has unsettled some shareholders but it believes it to be in the best long-term interests of the group and its shareholders," Victoria explained.
Therefore, the company continued with this strategy, growing overall like-for-like revenues and gain meaningful market share, it said.
"This growth has, as expected, come at a short-term cost with the introduction of lower margin, volume products," Victoria added. "With the strategy continuing to deliver increasing revenues and meaningful market share gains, the key now is to ensure margins continue to increase."
The company looks forward to a "successful 2020 financial year", it concluded.
Victoria (VCP)