Marks Electrical profit drops to £5m as shoppers forced to 'trade down' on goods

Marks Electrical listed on the London Stock Exchange in late 2021

Marks Electrical, the retailer, has reported that the cost-of-living crisis is causing cash-strapped shoppers to opt for cheaper household appliances.

This trend resulted in a one-third decrease in the company's profits last year. The firm, which was listed on the London Stock Exchange in 2021, stated that the trading environment had an impact on margins as consumers "remain highly price-conscious". Despite an increase in its domestic appliance market share from 2.5% to 2.8%, Marks Electrical's adjusted earnings fell by 33% to £5million for the year ending March 31.

Even though the company achieved record turnover for the year, with revenue increasing by 17% to £114million, profits still declined. Marks Electrical chief executive, Mark Smithson, said: "In the current trading environment, consumers remain highly price-conscious, which given our premium focus, continues to have an impact on our average order value, resulting in customer order volumes growing faster than revenue,".

He added: "This impact has limited our ability for margin expansion which we expect to continue in the short-term, when taking into account the relatively fixed cost of delivery. Whilst I continue to be personally frustrated about our margin progression during the year, I remain confident in our long-term growth prospects, and continue to be impressed by our ability to deliver market share gains profitably, against a fiercely competitive backdrop, whilst maintaining the highest levels of customer service standards in the industry," he said.

Marks Electrical, known for selling appliances such as dishwashers and ovens, along with tech items like games consoles and TVs, has seen its shares soar by 70% since its debut on London's AIM market over two years ago.

The firm reported that the squeeze on demand has rolled into the first quarter of the current financial year. In a recent trading update released on Wednesday, it noted "continuing pressures on customers trading down". Nevertheless, Marks Electrical highlighted that the months of April, May, and June had witnessed "strong trading", marked by double-digit revenue growth.