Footasylum has issued a profit warning after it suffered a hit to its margin during the crucial Christmas trading period.
The footwear retailer said it was cutting costs as profit margins are set to miss forecasts due to the higher-than-expected levels of promotional and clearance activity.
It said that stiff market conditions meant “promotional activity and discounting across the retail sector were higher than anticipated, with the result that Footasylum’s levels of promotional and clearance activity were greater than expected”.
Despite this, Footasylum’s total revenue went up by 14 per cent to £102.3 million in the 18 weeks running up to December, and an increase of 16 per cent in the year-to-date to £200.8 million.
Meanwhile, online sales climbed 28 per cent and revenue from in-store sales was up five per cent at £63.7 million.
“In the context of the current tough conditions on the high street, we are encouraged to have delivered revenue growth across all of our channels and major product categories, with online and wholesale continuing to perform particularly well,” Footasylum executive chairman Barry Bownaid said.
“We have also been pleased by the performance of the five new store openings and three upsizes that we completed in time for Christmas.
“However, the short-term outlook is undeniably challenging, and we continue to maintain our focus on cash, working capital and inventory management, as well as reducing costs across our operations.
“The current trading conditions have led to significant discounting and promotional activity across the sector, and this in turn has impacted our gross margin expectations for full-year 2019.”