ROCHDALE, United Kingdom — Footasylum, which sells Nike and Adidas trainers online and in stores across the UK, said on Tuesday it had had to cut prices after disappointing Christmas trading, in another sign that British consumers are reining in spending.
Shares in Footasylum plunged 28 percent to a record low in early trade after the company said lower margins meant its full-year core earnings would come in at the lower end of analysts’ estimates.
“The challenging trading conditions reported in the first half have continued throughout the Christmas trading period,” Footasylum said.
Its shares later recovered some losses but were still down 15.4 percent at 27.5 pence at 1003 GMT and have now shed 86 percent since the company listed on London’s AIM market in November 2017.
Footasylum, which was founded in 2005 by one of the co-founders of JD Sports, sells footwear and clothes primarily to 16- to 24-year olds. It now competes with JD Sports, Sports Direct and ASOS among others, which are all feeling the impact of sluggish British consumer spending amid squeezed household incomes and uncertainty ahead of Britain’s planned departure from the European Union.
Sports Direct owner Mike Ashley said last month that trading in November was “unbelievably bad,” while woman’s fashion retailer Bonmarche said retail trading conditions were significantly worse than during the 2008-09 financial crisis.
Footasylum said it was planning a wider initiative to cut costs but the plan could also entail some expenses in the short term.
Despite the recent challenges, the retailer’s revenue for the 18 weeks to December 29 rose 14 percent, boosted by strong online and wholesale sales. It also said it expects revenue for its full financial year, which ends on February 23, to be in line with estimates.
Still, the company said that Footasylum and other retailers had had to discount much more heavily than anticipated.
“While the cuts today are disappointing we would hope that we have passed the nadir of bad news,” Liberum analysts said in a note.
By Pushkala Aripaka; editors: Shounak Dasgupta and Susan Fenton.