Carpets and flooring retailer Victoria PLC (LON:VCP) expects its margins to come in below market expectations following a drive to cut prices to win market share, hammering its shares.
The AIM-listed company said its overall margin would be down by between 1%-1.5% percentage points compared to consensus market forecasts.
READ: Victoria sees full-year profit ahead of expectations for a fifth consecutive year
The flooring group said on Monday that underlying group revenues had risen by more than 3% in the six months to the end of September. The UK and Europe had delivered good growth but sales at its Australian unit dipped 4%, the company said.
Victoria also said it planned to offer €450mln of senior secured notes due in 2023, to repay its existing senior bank facility. It added that the interest rate, offering price and other terms would be determined at the time of pricing of the offering, subject to market conditions.
"The board firmly believes that it should capitalise on the strength of the group by driving sales and market share at this time, although this comes with a short-term investment in operating margin," CEO Philippe Hamers said in a statement.
"Based on year-to-date performance and taking into account seasonality, this is impacting the group's overall margin by approximately 1 - 1.5 percentage points versus consensus market forecasts, although margins are still expected to significantly exceed the prior year due to organic growth and product mix effects from previous acquisitions," he added.
Shares in Victoria were 22.2% down at 470.0p in late morning trade.