8 Jan 2019 07:00
8 January 2019
This announcement contains inside information
Footasylum plc
("Footasylum" or the "Company")
Trading Update
Further revenue growth across all channels and major product categories, despite challenging trading conditions
FY19 gross margin now expected to be lower than previously anticipated, due to higher than expected levels of promotional and clearance activity
Footasylum, a UK-based fashion retailer focusing on the branded footwear and apparel markets, announces an update on trading performance for the 18 weeks ended 29 December 2018 (the "period"). All comparative figures relate to the 18 weeks to 30 December 2017 unless otherwise stated.
Revenue
Footasylum continues to deliver revenue growth across all channels and all major product categories, with total revenue up 14% to £102.3m, and up 16% year-to-date to £200.8m. Online continues to perform strongly, up 28% to £36.0m, and on a year-to-date basis now accounts for 33% of total revenue, up from 30% in the comparative period. Wholesale revenue doubled from £1.3m to £2.6m.
Revenue from stores was up 5% at £63.7m, despite the challenging UK high street trading conditions and the previously announced delays in delivering planned upsizes and new stores. Five new store openings and three upsizes were completed ahead of Christmas, and the Board is encouraged by their progress to date. Following the new openings, Footasylum now operates 70 stores in the UK, 68 of which are the core Footasylum fascia.
18 weeks to 29 December 2018
| 2018 | 2017 | Revenue Growth | |
| £m | £m | £m | % |
Total Revenue - Store - Online - Wholesale | 102.3 63.7 36.0 2.6 | 89.8 60.4 28.1 1.3 | 12.5 3.3 7.9 1.3 | 14% 5% 28% 100% |
44 weeks to 29 December 2018
| 2018 | 2017 | Revenue Growth | |
| £m | £m | £m | % |
Total Revenue - Store - Online - Wholesale | 200.8 130.0 66.1 4.7 | 173.0 119.4 51.5 2.1 | 27.8 10.6 14.6 2.6 | 16% 9% 28% 124% |
Outlook
The challenging trading conditions reported in the first half have continued throughout the Christmas trading period. 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. Therefore, while Footasylum continues to expect to report FY19 revenue in line with consensus expectations, FY19 gross margin is now expected to be lower than current consensus expectations.
The Board continues to maintain its strong focus on cash and working capital management. Inventory was carefully managed throughout the period, with inventory balances ending the period only fractionally higher year on year. Footasylum remains (and expects to remain) in compliance with the covenants of its £30 million multi-currency revolving credit facility.
Reflecting this focus, and the lower gross margin performance, the Board is implementing a cost reduction plan across the business which may result in some exceptional costs in FY19. Footasylum now expects to report an adjusted EBITDA for FY19 towards the lower end of the current range of analyst forecasts.
The Board expects to announce the Company's preliminary results for the year ending 23 February 2019 on 21 May 2019.
Barry Bown, Executive Chairman of Footasylum, commented:
"In the context of the current tough conditions on the high street, we are encouraged to have delivered revenue growth across all of our channels and major product categories, with online and wholesale continuing to perform particularly well. We have also been pleased by the performance of the five new store openings and three upsizes that we completed in time for Christmas.
However, the short-term outlook is undeniably challenging, and we continue to maintain our focus on cash, working capital and inventory management, as well as reducing costs across our operations. The current trading conditions have led to significant discounting and promotional activity across the sector, and this in turn has impacted our gross margin expectations for FY19."
Enquiries:
Footasylum plc Tel: +44 (0) 1706 714 265
Clare Nesbitt, CEO
Barry Bown, Executive Chairman
Danielle Davies, CFO
GCA Altium Limited (Financial and Nominated Advisor) Tel: + 44 (0) 20 7484 4040
Phil Adams
Sam Fuller
Tim Richardson
Liberum Capital Limited (Broker) Tel: +44 (0) 20 3100 2222
John Fishley
Powerscourt (Financial Public Relations) Tel: + 44 (0) 20 7250 1446
Rob Greening
Lisa Kavanagh
Isabelle Saber
Customer website: https://www.footasylum.com/
Investor website: http://investors.footasylum.com/
Disclaimer
This announcement contains inside information for the purposes of article 7 of EU Regulation 596/2014. The person responsible for making this announcement on behalf of Footasylum is Nancy Kelsall, Company Secretary.
Certain statements in this financial report are forward-looking. Where the financial report includes forward-looking statements, these are made by the Directors in good faith based on the information available to them at the time of their approval of this report. Such statements are based on current expectations and are subject to a number of risks and uncertainties, including both economic and business risk factors that could cause actual events or results to differ materially from any expected future events or results referred to in these forward-looking statements. Unless otherwise required by applicable law, regulation or accounting standards, the Company undertakes no obligations to update any forward-looking statements whether as a result of new information, future events or otherwise.
About Footasylum
Footasylum is a UK-based fashion retailer focusing on the branded footwear and apparel markets. The Company retails "on-trend" product ranges which are predominantly aimed at 16 to 24-year-old fashion-conscious consumers and are sourced from an extensive stable of third-party and own brands. These include well-known sports and casual footwear and apparel brands, as well as up-and-coming brands and own label products.
Examples of third-party brands include: adidas; Nike; The North Face; Gym King; Converse; New Balance; EA7; Vans; Nicce London; Under Armour; Tommy Hilfiger; and Calvin Klein. Examples of Footasylum's own brands include: Kings Will Dream and Alessandro Zavetti.
The Company operates a multi-channel model which combines a 70-strong store estate - in a variety of high street, mall and retail park locations in cities and towns throughout Great Britain - with a fast-growing online platform and a recently launched wholesale arm for distributing its own brand ranges via a network of partners.
Footasylum was founded in 2005 and the Company's ordinary shares were admitted to trading on AIM in November 2017.