Marks Electrical plunges to loss after operational challenges
Marks Electrical plunged to a pre-tax loss of £1.7m in the year to 31 March, driven by lower trading profitability and costs associated with its transformation.
Marks Electrical plunged to a pre-tax loss of £1.7m in the year to 31 March, driven by lower trading profitability and costs associated with a software update.
The etailer’s group sales had reached a record high of £117.2m, with the 2.6% increase outperforming the wider electricals market.
It reported strong growth of 9.3% for the first half of the year, but that trading in the run up to Christmas had been hit by challenges to the company’s implementation of a new enterprise planning system (ERP).
Marks Electrical said this had “required us to reduce the number of delivery days during cut-over, and our strategic bet on consumer electronics growth in the peak trading period not playing out as we had anticipated”.
Gross product margin slipped from 25.4% to 24.4%, which it attributed to a higher contribution from its consumer electronics range in the margin mix.
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Marks Electrical chief executive Mark Smithson said: “During a challenging year for the group and in a market where consumers continue to remain price conscious, I am proud of the strategic and operational progress we have made.
“Our ERP implementation brought minor disruption to the business during the cutover period, however, the transition has been successful and our teams have quickly embraced this transformational change.
“This has been a significant, long-term strategic investment for the business, which will allow automation of process improvements to make our operations more efficient at scale, and enable us to deliver growth, profitability and value for all our stakeholders.”
Smithson said the company’s pivot back to a premium focused operating model will have a positive impact on the speed of our revenue growth.
He added: “We initiated this change in late FY25, and the impact of this shift away from entry-priced products has led to lower sales in Q1 against a strong comparative in the prior year, which also impacted operating leverage.
“However, as we focus on the right product hierarchy and sales channels, we expect this to have longer-term benefits on unit economics, and as comparables ease in later quarters we expect a return to revenue growth during FY26.”
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