Marks Electrical profits have almost halved in the six months to 30 September despite “robust first half trading” as shoppers traded down on big purchases.
The online electrical retailer reported an underlying pre-tax profit of £820,000, down from the £1.6m it reported in 2023. Adjusted EBITDA slipped from £2.3m to £2m.
It came as sales rose 9.3% to £58.8m, which it attributed in part to strong volume growth across major domestic appliances and consumer electronics.
However, Marks Electricals noted its average order value had dropped 9% as shoppers favoured non-premium products.
Looking ahead, the retailer expects to achieve £120m in sales with an EBITDA in excess of £4m.
It also estimates that the increase in national insurance employer contributions which take affect in April will cost the business £750,000 per year.
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Marks Electricals chief executive Mark Smithson said: “The first half has included two of the largest structural changes the business has seen, the departure from Euronics and the implementation of our new ERP system, but despite these, we continued to remain profitable and cash generative.
“These investments, while involving short-term challenges, have been made to position the business for long-term success.
Smithson added: “As the consumer has continued to trade down, we have evolved our business to meet those needs, perhaps leaning too much into non-premium products, which has led to erosion in our premium average order value.
“The knock-on implications of this on our distribution costs are something that we need to actively address moving forward by pivoting back to our historically premium focussed operating model.
“Whilst this pivot back to premium is likely to have an impact on the speed of our revenue growth, we are focussed on continuing to execute our strategy of driving profitable market share gains, ultimately enabling the group to deliver long-term value creation and become the UK’s leading premium electrical retailer.”
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