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Footasylum warns on profit in maiden results announcement

Footwear and apparel retailer Footasylum expects to report full-year adjusted EBITDA at less than half of last year’s £12.5 million, it warned on Monday.

In its maiden announcement after listing on the London Stock Exchange’s AIM market in 2017, the retailer said that despite an ongoing programme of investment to drive sales, its revenue growth for the full year is now expected to be below market expectations.

It reported lower overall gross margin due to a higher amount of clearance activity in stores – an issue impacting many retail businesses in recent months as the battle for customer spend has intensified.

Footasylum expects to report revenue of £98.6 million for the six months to 25 August 2018, which represents an increase of 18.5% compared to the corresponding period last year. Store revenue was up 12.4% to £66.3 million, while online revenue grew 28.5% to £30.2 million to account for 30.6% of the total revenue.

Wholesale revenue trebled to £2.1 million, but it is the 66-strong store estate in the UK where sales have been sluggish. Footasylum said trading since the beginning of the current financial year has been impacted by weak consumer sentiment on the high street, although store performance for May and June was said to be “positive”.

In July and August, the store performance was said to be “more challenging” exacerbated by some unforeseen delays in the company's new store openings and upsizes.

The business said it is confident about its long-term strategy as it continues to invest in improving its consumer offering ahead of the all-important peak trading period at the end of 2018. It reported the successful delivery of several technology projects in the first six months of its financial year, and said six new store openings and further upsizes are expected to be completed by December.

Barry Bown, executive chairman of Footasylum, remarked: "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. 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."

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