Footasylum shares plunged by almost 50 per cent this morning after the sportswear and footwear retailer issued a warning over full-year profits and sales.
The company said its revenue growth and earnings will come in “significantly lower than previous guidance” and now expects to bring in less than half of the £12.5 million it booked in earnings last year.
Footasylum blamed a “challenging” August and warned there was “no sign of a recovery in the short-term on the high street”.
The news prompted shares in the retailer to go into freefall, with its recently-floated stock nosediving by almost 50 per cent in morning trade to 44p.
“Trading since the beginning of the current financial year has been impacted by weak consumer sentiment on the high street,” Footasylum said in a statement.
“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 has sought to reassure investors that its growth plans would still keep the company on track ahead of the critical Christmas trading period.
Footasylum plans to grow its chain from 65 stores currently to around 150 in the UK, while also expanding outlets in key locations.
It is also bolstering its online offering, with the aim of 50 per cent of total turnover coming from online and wholesale revenues.
“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,” executive chairman Barry Bown.
“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.”
Footasylum expects to report an 18.5 per cent increase in revenue to £98.6 million for its half year period ending August 25.
Store revenue was up 12.4 per cent to £66.3 million, online revenue grew 28.5 per cent to £30.2 million while wholesale revenue trebled to £2.1 million.