Marks Electrical Group plc

Trading update for the nine months ended 31 December 2023

Marks Electrical Group plc ("Marks Electrical" or "The Group"), a fast-growing online electrical retailer, provides a trading update for the nine months ended 31 December 2023 ("the period").

Highlights

·      Strong growth in revenue during Q3-24 (October to December) with revenue growth of 17.8% to £35.1m (Q3-23 £29.8m).

·      Year to date (YTD) revenue growth of 22.0% to £88.9m (2022 YTD: £72.9m).

·      Increased market share in the Major Domestic Appliances and Consumer Electronics markets.

·      In a challenging trading environment where consumers remain highly price-conscious, our gross product margin did not increase to the levels we expected, and despite proactive action on other controllable costs, the impact of this in the peak trading period has had a material impact on our full year profit guidance.

·      As a result, we now expect our full year revenue to be in the range of £115-118m with EBITDA in the range of £5-6m. Going forward, we expect to see continued revenue growth in-line with our expectations, but remain cautious on the speed of recovery in consumer buying patterns, which we expect to temporarily impact the recovery of our gross product margin.

·      Our strategic decision to maintain our delivery & installation services in-house allowed us to achieve record volumes during peak trading, whilst maintaining our industry leading Trustpilot score of 4.8. Furthermore, we have now reached over 60,000 reviews with 95% of those reviews being 4 and 5 star, demonstrating the strength of our best-in-class customer proposition.

·      Despite significant product margin challenges, we gained market share whilst remaining profitable, provided industry leading services to customers, maintained our continued focus on tight overhead cost control and disciplined working capital and retained our net cash balance sheet.

Mark Smithson, Chief Executive Officer, commented:

"I continue to remain proud of the entire team at Marks Electrical for delivering a record peak trading period whilst gaining market share and maintaining our industry leading Trustpilot score of 4.8. This further demonstrates the strength and attractiveness of our market-leading customer offering and as brand awareness improves, we continue to see a strong repeat customer rate.

Whilst I am personally frustrated about our expected margin progression in the second half, I remain  confident about 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.

As we work tirelessly as a team to enhance our gross product margin in the remaining months of FY24 and into FY25, I also know from 37 years of trading that margin fluctuations are inevitable, they present us with an opportunity to learn, and will ultimately enable the Group to deliver long-term value creation and position us as the UK's leading premium electrical retailer."

Enquiries:

Marks Electrical Group plc                                                                                              Via Dentons Global Advisors:

Mark Smithson, CEO                                                                                                                           Tel: +44 (0)20 7664 5095

Josh Egan, CFO                                                                                                                  

Dentons Global Advisors (Financial PR)

Jonathan Brill / James Styles / Nishad Sanzagiri                                                                                 Tel: +44 (0)20 7664 5095

markselectrical@dentonsglobaladvisors.com                                                                                                                                                 

Canaccord Genuity (NOMAD and Broker)

Max Hartley / George Grainger (NOMAD) / Kit Stephenson (Sales)                                                    Tel: +44 (0) 207 886 2500

About Marks Electrical

Marks Electrical is a fast growing, highly scalable premium electrical retailer which sells, delivers, installs and recycles a wide range of household electrical products. The Group was founded in Leicester in 1987 by Mark Smithson and has scaled into a nationwide online retailer with a compelling growth track record, thanks to its vertically integrated, low-cost, high-quality operating model, supported by the ongoing structural shift of consumers to purchase online. The Group operates within the UK Major Domestic Appliances (MDA) and Consumer Electronics (CE) market, estimated to be worth approximately £7 billion.

Primarily through its simple, clear and intuitive website - markselectrical.co.uk - the Group offers over 4,500 products from over 50 leading brands across its main product categories, which include Cooking, Refrigeration, Washers & Dryers, Dishwashers and Audio-Visual. These products are sourced from UK distributors of the brands, with whom the Group maintains strong and direct relationships. Marks Electrical delivers direct to customers in its owned and branded vehicles, operated by the Group's skilled team of delivery drivers, who are also able to offer installation and recycling services.

For further information, visit the Marks Electrical corporate website: https://group.markselectrical.co.uk and its retail website: https://markselectrical.co.uk/.

The information contained within this announcement is deemed by the Company to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.