Profit drops at Marks Electrical amid ‘fiercely competitive’ backdrop but signs things are picking up
The online electrical retailer reported that it was struggling with "downward margin pressure" as a result of consumers trading-down.
Marks Electrical Group continued to gain market share in its second year since floating on the public markets but saw profitability take a hit in a difficult demand environment.
Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) took a hit, falling by a third to £5m, which the firm said was in line with guidance.
The online electrical retailer reported that it was struggling with “downward margin pressure” due to consumers trading down.
The hit to profit came despite the firm reporting record revenue for the year, with revenue climbing 17 per cent to £114.3m.
Mark Smithson, chief executive, said the firm had faced a “challenging year” as consumers remain “highly price-conscious,” but pointed to the revenue growth as an indication of the firm’s prospects.
“Whilst I continue to be personally frustrated about our margin progression during the year, I remain confident in our long-term growth prospects, and continue to be impressed by our ability to deliver market share gains profitably, against a fiercely competitive backdrop, whilst maintaining the highest levels of customer service standards in the industry,” he said.
Marks Electrical maintained its dividend payout despite lower profitability, which it said was a reflection of its confidence in its future outlook. It proposed a final dividend of 0.66p per share, giving a full-year dividend per share of 0.96p.
It also noted that there had been “strong trading” in April, May and June, with double-digit revenue growth following weakness in the first three months of the calendar year.
“The first three months of fiscal 2025 have been encouraging and we have been pleased to see a return to double-digit growth during the period, providing us with a robust platform to continue driving profitable market share gains, and ultimately enabling the Group to deliver long-term value creation and become the UK’s leading premium electrical retailer,” Smithson said.
