Marks Electrical reported a significant drop in profits while experiencing a rise in sales.
- In the first half of the year, pre-tax profits fell nearly by half to £820,000.
- Sales increased by 9.3%, reaching £58.8 million, yet the average order value fell by 9%.
- The departure from Euronics and a new ERP system were major changes during this period.
- The business plans to pivot back to focusing on premium products to restore higher order values.
Marks Electrical has experienced a notable 50% decline in pre-tax profits during the six-month period ending 30 September. Despite this, the company achieved a 9.3% increase in sales, totalling £58.8 million. This growth was driven by strong volume sales in major domestic appliances and consumer electronics. However, the average order value decreased by 9%, suggesting a shift in consumer preference towards more affordable, non-premium products.
The company’s chief executive, Mark Smithson, highlighted the challenges and strategic shifts that occurred in the first half of the year. Notably, the retailer parted ways with Euronics and implemented a new enterprise resource planning system, which, while challenging, were necessary for positioning the business for long-term growth. Smithson acknowledged that leaning into non-premium products has eroded the average order value, but the company plans to pivot back to a premium-focused model.
Looking ahead, Marks Electrical is optimistic about achieving £120 million in sales with an EBITDA exceeding £4 million. However, the company also anticipates approximately £750,000 in additional costs due to increases in national insurance employer contributions, effective April next year. These economic pressures underscore the need for a strategic shift back to focusing on premium products, which might slow revenue growth temporarily but is seen as essential for sustaining market competitiveness and achieving long-term value.
Adapting to consumer trends by focusing back on premium products could be key to Marks Electrical’s future success.
