Sports retailer’s shares crash after profit alert
HARES in Footasylum crashed this week after the sports retailer warned over full-year profits and sales.
Despite reporting a 18.5 per cent rise in sales to £98.6m for the six months to August 25, the Rochdale-based group has revealed a torrid performance in July and August.
In a trading update on Monday the company said revenue growth and earnings will come in “significantly lower” than previous guidance.
It now expects to bring in less than half of the £12.5 million it made last year.
As a result, shares slumped 44 per cent, falling 37p to 47p, on Monday morning.
In a statement, the group said: “Trading since the beginning of the current financial year has been impacted by weak consumer sentiment on the high street.
“Store performance during July and August was more challenging which, in the context of there being no sign of a recovery in the shortterm on the high street, has led the board to reassess its overall expectations for the balance of full-year 2019.”
Footasylum sought to reassure investors that its growth plans would keep the group on track ahead of the critical Christmas trading period.
The company is looking to grow its chain from 65 stores currently to around 150 in the UK, while also expanding outlets in key locations.
The group is also boosting its online offering, with the aim of 50 per cent of total turnover coming from online and wholesale revenues.
Executive chairman Barry Bown said: “These are undoubtedly challenging times in the retail industry and, in common with many other businesses, Footasylum’s trading has continued to be impacted by weak consumer sentiment.
“On top of that, increased clearance in stores has led to a reduction in gross margin and we have also had some unforeseen delays in our new store openings and upsizes.
“However, we have continued our programme of investment, both in upsizing our stores and in our digital capabilities and are working hard on a number of initiatives to maximise the company’s performance during the upcoming peak trading period.”
Footasylum expects to report revenue of £98.6 million for the six months to August 25, an increase of 18.5 per cent.
Store revenue was up 12.4 per cent to £66.3 million, online revenue grew 28.5 per cent to £30.2 million and wholesale revenue trebled to £2.1 million.
The chain, which sells its own brands and Adidas and Nike, was launched by David Makin and John Wardle, who founded JD Sports.