Footwear retailer, Footasylum has issued a profit warning following “challenging trading conditions” during the festive period.
Footasylum said it would cut costs after it changed expectations for gross margin in the 2019 financial year, despite revenue still expected to remain as forecast. The retailer blamed “market backdrop, promotional activity and discounting across the retail sector” along with “UK economic uncertainty and weakening consumer sentiment” for its woes.
Despite the changes to its forecast, Footasylum reported a rise in total revenue of 14% up to £102.3m. The retailer also saw a 28% increase in online revenue up to £36m, making up a 33% share of the group’s total year-on-year revenue. The retailer also opened five new stores and upsized a further three prior to Christmas, bringing its total number of stores to 70.
Barry Bown, executive chairman of Footasylum, said: “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. 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 FY19.”