Footasylum has warned on Tuesday that it expects its adjusted earnings to lean towards the “lower end of the current range of analyst forecasts”. Shares in the company have slid by over 13% this morning following the announcement.
The footwear retailer has said that it expects to reveal an adjusted EBITDA for 2019 that lean towards the lower end of expectations. Revenue growth is expected to meet current expectations.
Footasylum has pointed towards the difficult UK retail climate as a cause of this weaker 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,” the company said.
Footasylum is not the only fashion retailer to struggle over Christmas. Online retailer, Asos, revealed an unexpected profit warning over the festive shopping season.
Total revenue was up 14% to £102.3 million, and has increased by 16% year-to-date to £200.8 million. Online sales continue to deliver a strong performance, up 28% to £36.0 million. On a year-to-date basis, this now accounts for 33% of total revenue. Additionally, wholesale revenue doubled from £1.3 million to £2.6 million.
Store revenue increased 5% to £63.7 million. This positive increase is despite the challenging UK retail climate previously highlighted. Five new stores opened and three were upsized ahead of the Christmas period.
Executive Chairman of Footasylum, Barry Brown, commented on the announcement:
“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.”
Financial results from the festive period are beginning to be announced this week. Morrisons reported a steady sales growth on Tuesday, whilst both Selfridges and Aldi announced record breaking results on Monday.
At 09:07 GMT today, shares in Footasylum plc (LON:FOOT) were trading at -13.23%.
