Footasylum warns over blow from heavy festive discounting
Retailer Footasylum has warned over pressure on full-year earnings after it slashed prices amid heavy discounting on the high street.
The 70-strong chain said it now expects full-year underlying earnings to be towards the lower end of forecasts after profit margins were hit by steep discounting over the festive season.
It cautioned that Brexit uncertainty and weakening consumer sentiment were causing “some of the most difficult trading conditions seen in recent years”.
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% rise in total sales over the 18 weeks to 29 December, with online up 28% and stores up 5%.
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 25 August against profits of £1.7m a year earlier.
The firm’s stock tanked in September after it warned over full-year profits and sales.
Words and image: Press Association