Marks Electrical Group PLC (AIM:MRK) shares fizzled 25% lower to 68.6p after the company warned on profits despite reporting higher sales and growing market share.
Revenue for the nine months to end-December was up 22% to £88.9 million and for the year to March 2024 is expected to be in the range of £115-118 million.
But the electrical products retailer pointed to a “fiercely competitive” trading backdrop where consumers “remain highly price-conscious”, which has resulted in gross product margin not increasing as expected.
“Despite proactive action on other controllable costs, the impact of this in the peak trading period has had a material impact on our full-year profit guidance,” the company said.
Underlying profit (EBITDA) for the full year is seen coming in at £5-6 million, down from £7 million-plus in the past two years.
“Going forward, we expect to see continued revenue growth in line with our expectations, but remain cautious on the speed of recovery in consumer buying patterns, which we expect to temporarily impact the recovery of our gross product margin.”
Chief executive Mark Smithson said he was personally frustrated about the margin squeeze but felt gaining market share and maintaining a Trustpilot score of 4.8 demonstrates “the strength and attractiveness of our market-leading customer offering and as brand awareness improves, we continue to see a strong repeat customer rate”.