Shares in Marks Electrical (MRK:AIM) sparked up 1.3% to 121p as the online televisions, fridge freezers and washing machines retailer shrugged off supply chain challenges and demanding comparatives to deliver record sales for the all-important Christmas quarter to December 2021.
The fast-growing online retailer managed to cope with a surge in demand for its products by working closely with suppliers in order to maintain inventory levels during the festive period and insisted it remains on track to achieve its 2022 targets.
MOMENTUM CONTINUES
AIM newcomer Marks Electrical enjoyed strong trading over the Black Friday period and the run-up to Christmas. Sales sparked up 27.4% year-on-year to £22.3 million for the third quarter to December 2021, continuing the momentum seen during the pandemic in the face of tough comparatives.
Year-to-date revenue growth of 55% to the best part of £60 million keeps the company on track to deliver its 2022 revenue target - consensus calls for sales of £81.2 million - and with operational leverage driving margin expansion, Marks Electrical is confident in meeting its full year adjusted EBITDA margin target of 9%.
GAINING MARKET SHARE
Founded in Leicester in 1987 by CEO Mark Smithson, Marks Electrical sells, delivers, installs and recycles a wide range of household electricals nationwide.
Despite rising competition from brick and mortar retailers following the easing of Covid restrictions, Marks Electrical has continued to take market share in the Major Domestic Appliances segment and generated especially strong sales of televisions in the nine month period, up 103% year-on-year thanks to a healthy allocation of products from key brand.
During the Christmas quarter, Marks Electrical also benefited from its growing in-house fleet of delivery vehicles, which achieved record delivery volumes.
Smithson commented: ‘In order to improve brand awareness, we continued our investment in TV campaigns, leading to increased website traffic and promoting the Marks Electrical brand. This, combined with our revised approach to digital marketing, helped attract new customers to our site.’
He explained: ‘We’ve continued to work closely with all our suppliers in order to maintain inventory levels during the period, and have successfully coped with the continued surge in demand for our products, achieving record delivery numbers and ensuring we maximise the value on each vehicle.
‘In a market with supply issues, this demonstrates the strength of our relationships with our suppliers and the agility of our business model to cope with peak demand.’
Smithson also insisted: ‘Our momentum has continued into January and we look forward to maintaining our performance management discipline on revenue, profit and cash in the final months of the year.’
THE SHORE CAPITAL VIEW
Shore Capital said this was a positive trading update from Marks Electrical, although the broker cautioned that Omicron and supply chain-related headwinds will continue to impact the electricals space ‘at least until the beginning of the summer’.
The broker added that customer acquisition costs are rising as retailers fiercely battle for market share, though Marks Electrical ‘stands out on two fronts: it only trades online and can count on its delivery network. Fast delivery times are critical to maximising customers’ satisfaction and Marks offers free next day delivery, seven days a week.’
