- Online electricals retailer proposes maiden dividend
- Sales growth exceeding 20% in new financial year
- CEO Mark Smithson sees huge growth runway ahead
Shares in Marks Electrical (MRK:AIM) sparked up 2.2% to 93.5p after the fast growing online electricals retailer reported better than expected full year earnings and a positive start to the new financial year despite facing increased competition.
While founder and CEO Mark Smithson is ‘conscious of the challenges raised by the cost of living crisis’ and its impact on consumer confidence, the AIM newcomer demonstrated confidence in its cash position and business model by declaring a maiden final dividend of 0.67p.
SPARKY PERFORMANCE
Results for the year to 31 March 2022 from the web-based televisions, tumble dryers and dishwashers purveyor, which floated on AIM in November 2021, revealed sales up 44% to a record £80.5 million, all the more impressive given the prior year’s Covid-inflated comparator.
The Leicester-based retailer generated adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of £7.2 million.
This was a credible result in the context of industry-wide supply chain disruption and waning consumer confidence, albeit below the prior year’s £7.7 million haul after investment in advertising and marketing to build brand awareness and ‘in driving the operational excellence of the business’.
HUGE GROWTH RUNWAY
Marks Electrical also pleased the market with news of continued positive trading momentum in the first months of the new financial year, with sales growth exceeding 20% year-on-year.
Smithson commented: ‘While we are conscious of the challenges raised by the cost of living crisis in the UK and its impact on consumer confidence, our low-cost and execution-focused model leaves us well positioned to manage operationally, and with still only 1.6% market share of the £5.4 billion UK major domestic appliances market, we see significant scope and opportunity for growth.’
The founder believes Marks Electrical has ‘a huge runway to grow profitably. Our market-leading customer service, free next day delivery offering and competitive pricing, gives us a serious customer proposition and position of strength to take further market share across the UK.’
THE ANALYST’S VIEW
Chris Wickham, analyst at Equity Development, expects ‘further meaningful progress this year’ and wrote: ‘A better than expected EPS outcome, strong cash conversion and an unusually high return on capital were pleasing financial features of Marks Electrical’s FY 2022 results statement.
‘The company also reports an upbeat start to FY2023 while articulating a clear path to sustainable growth through its customer proposition, increasing brand awareness, higher operational capacity and favourable financial dynamics.’
