Cash-strapped shoppers are looking to trade down their household appliances amid the cost-of-living crisis, according to retailer Marks Electrical, in a trend which pushed the firm’s profits down by one-third last year.
The electrical goods seller, which listed on the London Stock Exchange in 2021, said the trading environment weighed on margins as consumers “remain highly price-conscious”.
Marks Electrical’s adjusted earnings were down 33% to £5 million for the year ending March 31, despite its domestic appliance market share rising to 2.8% in the period, up from 2.5% last year.
The falling profit came despite the firm bringing in record turnover for the year, with revenue increasing 17% to £114 million.
“In the current trading environment, consumers remain highly price-conscious, which given our premium focus, continues to have an impact on our average order value, resulting in customer order volumes growing faster than revenue,” said Marks Electrical chief executive Mark Smithson.
“This impact has limited our ability for margin expansion which we expect to continue in the short-term, when taking into account the relatively fixed cost of delivery. “
“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 sells appliances like dishwashers and ovens, as well as tech goods like games consoles and TVs. Since its initial public offering on London’s AIM market more than two years ago, shares have risen 70%.
The company said the demand pressure had continued into the first three months of the current financial year. In a trading update on Wednesday, it had seen “continuing pressures on customers trading down”.
Despite this, it said April, May and June had seen “strong trading” with double-digit revenue growth.