Marks Electrical issued a profit warning to investors after facing weak first-half trading and increasing costs.
The electricals specialist saw lower sales of its two major domestic appliances and consumer electronics categories, compared to the same period last year.
The business explained that sales had been falling over 2025 due to it moving away from lower-priced goods and focusing more on “premium” products.
Marks Electrical said the adjustment was affecting revenues as consumers had been spending less while shopping.
Despite expecting to return to revenue growth during its second half, the brand forecasts adjusted EBITDA for FY26 to be around £1.7m, a £4.2m decline from last year.
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The retailer’s CEO Mark Smithson said: “Clearly, I am very disappointed that sales in Q2-FY26 continued the trend we noted in our FY-25 preliminary announcement.
“That said, we have built a strong business over the last few years, with growing brand recognition, nationwide distribution and installation capability.”
He added: “We continue to focus on margin but with increasing employee costs and increased technology cost for our new ERP system, we have not yet been able to exploit the operating leverage effectively.
“With a more balanced product mix as we enter the peak period of our trading, we remain confident in a stronger H2 performance.”
Marks Electrical plunged to a loss in June, following operational challenges at the business.
The group recorded a pre-tax loss of £1.7m in the year to 31 March, driven by lower trading profitability and costs associated with a software update.
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