Profits have dropped at Leicester online electrical retailer, Marks Electrical Group, in spite of record revenue.
According to full year audited results for the 12 months ended 31 March 2024 (FY24), pre-tax profits declined to £616,000 from £6.4m in the year prior.
This was primarily due to lower trading profitability as well as the impact of the costs incurred to replace the business’s legacy enterprise resourcing planning system with Microsoft Dynamics 365.
Revenue, however, was up 16.9% year on year, at £114.3m (FY23: £97.8m), doubling the revenue Marks Electrical achieved in the year prior to listing (FY21: £56m).
The firm noted it has “optimism for the year ahead,” following a strong trading performance in April, May and June, with double-digit revenue growth and momentum starting to pick-up following a weaker January to March trading period.
Mark Smithson, Chief Executive Officer, said: “During what was a more challenging year for the Group, in an environment where consumers remained highly price-conscious, we continued to make good strategic progress across multiple fronts as a business. I am proud of the ongoing commitment and dedication of our entire team of customer-focused colleagues.
“Over the past year we invested in our operations and systems to position the business for long-term success, navigated a trade-down in customer buying preferences, managed the inflation increases impacting our cost base and continued to make a profit.
“Having doubled revenue since IPO, we’ve also managed to grow our market share profitably, and thanks to our disciplined approach to capital allocation, we’ve consistently returned a dividend to our shareholders, whilst retaining a net cash position. Our strategy and approach leaves us very well positioned for a market recovery when it occurs.
“Our relentless focus on operational excellence and customer service has enabled us to continue to gain share in a very competitive market, growing our share from 2.5% to 2.8% of the overall Major Domestic Appliances (“MDA”) market and from 4.7% to 5.3% in the online segment, with huge opportunities ahead, both in MDA and in other segments of Consumer Electronics and Small Domestic Appliances.
“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.
“The first three months of FY25 have been encouraging and we have been pleased to see a return to double-digit growth during the period, providing us with a robust platform to continue driving profitable market share gains, and ultimately enabling the Group to deliver long-term value creation and become the UK’s leading premium electrical retailer.”
