Victorian Plumbing Group PLC (AIM:VIC) shares dropped 16% after new guidance prompted analysts to cut earnings forecasts and raise questions over the group’s ambitious expansion into homewares.
While the company reported a 6% rise in half-year revenue to £152.7 million and a 15% increase in adjusted EBITDA, full-year guidance disappointed.
Management now expects revenue growth of 4% to 6% and adjusted pre-tax profit of £21 million to £22 million. These figures include £3 million in set-up costs for the launch of the MFI brand in 2026.
Peel Hunt downgraded its full-year forecasts, cutting EBITDA by £2 million and PBT by £3 million, now expecting £32.1 million and £21.4 million respectively.
It also lowered its financial 2026 pre-tax profit estimate by £6.5 million and reduced its target price from 120p to 110p, downgrading the shares from 'buy' to 'hold'.
While still positive on the long-term growth potential, analysts want to see the MFI strategy gain traction first.
Panmure Liberum echoed the caution. It noted that, excluding MFI costs, guidance remains in line with consensus at £33 to £34 million EBITDA and £24 to £25 million PBT.
However, it warned that expanding into the £20 billion homewares market could prove more expensive than anticipated.
Competing with established names like Dunelm and IKEA will likely require heavier investment in digital marketing, where Google may be the biggest winner.
The shares fell 15.76p to 89.94p.