Value retail chain Wilko has recorded a sharp drop in profits, attributing it to the weak sterling and the “unilateral imposition” of the national living wage.
For the year to January 28, pre-tax profit plummeted by 80 per cent to £5.2 million, exacerbated by £12.9 million losses from currency forward contracts.
While Wilko also experienced a 13 per cent drop in EBITDA to £48.9 million, like-for-likes was up by one per cent and total sales rose by 3.3 per cent.
“Sterling depreciated 15 per cent against the US dollar following the Brexit vote and has remained broadly at this low ever since,” the retailer said.
“The impact on UK prices is widely expected to result in up to five per cent inflation during 2017 as UK importers struggle to absorb the cost increase of imported goods.
“The outlook for 2017 and beyond has been reduced from pre-Brexit levels as the UK adapts to uncertainty and consumers are expected to see a reduction in real wages.”
Wilko has also criticised the introduction of the national living wage.
“Chancellor Osborne’s final austerity budget surprised the industry by its unilateral imposition of a statutory minimum living wage at well above expected levels,” it company said.
“All low margin businesses in a zero inflation economy were affected.”
Wilko also opened 19 new stores during the period.