Online bathroom retailer Victorian Plumbing says gross profits in the second half of its financial year are likely to be lower as the Merseyside business grapples with inflation. Tony McDonough reports
Merseyside-based online bathroom retailer Victorian Plumbing says inflationary pressures are likely to hit its gross profit margins in the second half of its financial year.
In a trading update on Thursday, the Formby-based company, which employs around 400 people, said it would look to shield its customers from price rises due to inflation by absorbing some of the rising costs.
In June last year the business, which employs more than 400 people, floated on the London Stock Exchange’s Alternative Investment Market (AIM). It raised gross proceeds of £11.6m giving it a market capitalisation on admission of £850m. It was the largest-ever float by a company on AIM.
However, in December, the business saw the values of its shares plummet more than 40% after it warned of a possible fall in gross profit margins for the coming year. In the latest update it said it was continuing to to trade “in line with the dynamic” set out in the December update.
The company said: “Our relative trading performance has been encouraging against a backdrop of lower customer demand. Revenue for the four months ended January 31, 2022, was down 3% year-on-year, but up 38% on the same period two years ago, while marketing spend has now started to normalise.
“As we look to the second half of the financial year, we note that the comparative period performance for revenue eases and so we expect to return to having modest year-on-year growth through the second half of 2022.
“There are however ongoing inflationary cost pressures that we face. We are acutely aware that our customers are also managing inflationary pressures and will adopt a careful approach to price rises, which means we are choosing to temporarily absorb some additional costs.
“We therefore expect both gross profit margin and adjusted EBITDA margin to be slightly lower than previously anticipated. We remain confident in our ability to continue to take market share and in our long term growth plans.”