Footasylum shares are in free-fall – down a huge 50 per cent in early trading to 44p – after the newly listed firm said its full-year sales and profits were set to disappoint.
The upmarket sportswear retailer warned investors today that earnings will be ‘significantly lower than previous guidance’ – less than half of the £12.5million it made last year.
Footasylum pinned its woes on a ‘challenging’ July and August and claimed that there is ‘no sign of a recovery in the short-term on the High Street’.
Footasylum floated in November with a value of £150million, but shares have crashed since
The chain is one of a number of High Street operators struggling to secure sales as shoppers abandon streets and malls.
Retailers like M&S and Debenhams have endured falling sales, while House of Fraser, Maplin and Poundworld have all tumbled into administration this year.
In the unscheduled statement, Footasylum 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 short-term on the high street, has led the board to reassess its overall expectations for the balance of full-year 2019.’
The retailer, which floated last November, insisted that its store upsizing and digital improvements will keep the group on track ahead of the vital Christmas trading period.
It harbours ambitions to grow the chain from 65 UK stores to around 150, but said that the project has been beset with ‘unforeseen delays’.
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‘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,’ said executive chairman Barry Bown, who previously ran JD Sports.
‘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,’he added.
In the first six months of the year, Footasylum’s store sales jumped 12.4 per cent to £66.3million, while online revenue ticked up 28.5 per cent to £30.2million.
The firm’s value halved in June after it spooked investors with a warning that profits would be more ‘modest’ this year than last. In a single day, its shares plunged from above 160p to around 80p.
‘The strong start Footasylum made after its November 2017 IPO now feels an awful long time ago,’ said AJ Bell investment director Russ Mould.
‘Management’s argument that its core, fashion-conscious 16-to-24-year-old demographic would continue to spend on trainers and t-shirts whatever the economic backdrop has been heavily undermined.
‘Ultimately it is questionable whether investors will still share management’s continuing confidence in the ‘long-term prospects’ of the group.’