Marks Electrical H1 revenues rise but earnings dip

Online electrical retailer Marks Electrical posted a rise in first-half revenues on Tuesday as it continues to take market share, although group earnings dipped.

In the six months to 30 September, revenues grew 15.1% to £43.1m. The company hailed a "resilient" profit performance in tough market conditions, with adjusted earnings before interest, tax, depreciation and amortisation of £2.7m, down from £3.0m in the same period a year earlier as the margin fell 180 basis points to 6.3%.

The company pointed to a 110bps reduction in gross margin due to competitor discounting and increased fuel and national insurance costs, and a 50bps increase in advertising and marketing costs as it maintains its focus on expanding brand awareness prior to the peak trading period.

Marks grew its share in the major domestic appliances market from 1.6% in the first half of last year to 2.1%, with its share of the online segment of the market growing from 2.6% to 3.9%. In the consumer electronics market, the company’s market share rose to 0.3% from 0.2%, with its share of the online segment up to 0.6% from 0.4%.

Chief executive Mark Smithson said he was proud of the performance delivered against a tough backdrop.

"This further demonstrates the resilience of our business model and the attractiveness of our market-leading customer offering," he said.

"As more people across the UK come into contact with the Marks Electrical proposition and become customers, we are able to harness our highly efficient, single-site operational model to drive profitable market share growth.

"The strong competitive activity we saw in pricing and marketing during the first half has begun to ease more recently and despite the margin pressure, we were able to achieve an adjusted EBITDA margin of 6.3%, keeping us on track to achieve our full year objectives and continuing to demonstrate the differentiated margin proposition of our operating model."