RMUs are modules with shelving, signage, storage and an internet connection that allows retailers to sell products in shopping centres.
The company is having a tough time on the market as it recently cut its dividend for the first time since floating on AIM in 2005. Its shares have crashed 18.6% to 17.9p.
Overall sales for the year to 31 December are £700,000 lower than expected at £10.2m, resulting in £425,000 drop in profitability.
Revenue from SpaceandPeople’s mobile promotion kiosk business is lower than expected due to a delay in the roll out of units to new venues from the fourth quarter of 2016 to 2017. However, this is 138% higher at £1.6m compared to £656,000 in 2015.
Investment bank Cantor Fitzgerald analyst Ian Osburn is disappointed by the update as demand over Christmas was particularly weak.
He cautiously recommends ‘hold’ as one of the core issues is that the company failed to convert enough interest in RMUs into orders, which meant they were not installed.
One of the risks is a further deterioration in the retail environment as this can impact SpaceandPeople’s future earnings, although it may benefit from further business wins and contract renewals.
The business has warned investors about a decline in the scale of its RMU businesses in the UK and Germany.
It expects revenue in its German retail division to decline and plans to phase out unprofitable units.