Sports retailer in warning over costs

RETAILER FOOTASYLUM has warned over pressure on full-year earnings after it slashed prices amid heavy discounting on the high street.

Shares in the chain plunged more than 15 per cent after it said it now expects full-year underlying earnings to be towards the lower end of forecasts, as profit margins were hit by steep discounting over the festive season.

The sports retailer is now cutting costs across the business to offset the knock to profit margins.

But it saw discounting efforts help keep revenues on track for the full year, with the group reporting a 14 per cent rise in total sales over the 18 weeks to December 29, with online up 28 per cent and stores up 5 per cent.

Footasylum executive chairman, Barry Bown, said: “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 full-year 2019.”

The festive update comes after Footaslyum said in October that it would slow down its store opening plans after swinging to a £2.5m pre-tax loss for the 26 weeks to August 25 against profits of £1.7m profit a year earlier.