Shares in Kitwave Group PLC (AIM:KITW) fell 23% to 248.84p after the wholesaler reported interim results that included a profit warning.
This was due to three main factors: extra short-term investment in moving to a new South West depot, an increase in employer National Insurance contributions and the lower sales volumes to the tourism-dependent corner of the leisure sector.
The group's adjusted operating profit will be below current market expectations, with new guidance of between £38 million and £40.5 million.
The number rose 22% to £13.2 million in the first six months to 30 April, on the back of a 27% increase in revenue to £376.2 million.
Gross profit margin improved to 22.6%, supported by operational progress and the acquisition of Creed Foodservice.
Creed Foodservice’s integration is ahead of schedule, with full benefits expected over the next two years. The operational merger of Total Foodservice with Miller Foodservice remains on track for completion by year-end.
The group declared an increased interim dividend of 4p per share.
Chief executive Ben Maxted said: "This period has seen record revenue and operating profits for Kitwave, underpinned by our continued strategic transformation and supported by the acquisition of Creed Foodservice, which has proven to be an excellent addition to the group."
He added that while short-term investments and cost pressures have led to a lowered profit outlook, the Group’s strong balance sheet and cash generation provide resilience and flexibility to pursue its buy-and-build strategy.
The group also plans to change its accounting reference date from 31 October to 31 December to better align with its business seasonality.