- Kitchenware seller sees no growth this year
- Dishes out massive downgrade
- Like-for-likes weaker across all channels
Shares in ProCook (PROC) plunged 37.2% to 49p after the direct-to-consumer kitchenware specialist warned profits will fall short of expectations on flat sales in the current year with retail footfall weak and cash-strapped consumers reining in spending.
The sharp slump left shares in the Gloucester-based knives, pans, coasters and eggcups seller trading 66% below last November’s 145p initial public offering (IPO) issue price.
DISHING OUT A DOWNGRADE
With the consumer squeeze biting hard, ProCook’s sales growth is coming off the boil and the company has downgraded adjusted pre-tax profits guidance for the year to March 2023 to between £4 million and £6 million, massively below the £11 million broker Peel Hunt had previously been calling for.
And with the kitchenware sector now struggling, ProCook now expects sales to be flat on last year’s £69.2 million.
Trading in the first quarter of the new financial year has been impacted by ‘increasingly challenging market conditions, with customers affected by the well-documented exceptional pressures on discretionary spend’.
In the current first quarter, ProCook is also lapping some ‘exceptionally strong’ comparatives from last year, when the company benefited from pent-up demand following the lifting of Covid-19 restrictions and the reopening of its bricks and mortar stores.
In line with the wider kitchenware market, ProCook’s like-for-like sales have weakened across all channels, though its sales remain ‘significantly’ higher than pre-Covid levels.
SHARPER FOCUS
ProCook continues to attract new customers to the brand, but the cost of living crisis is impacting average spend, conversion and repeat rates. The company suggested it will be pulling back from international expansion plans for now.
While the firm said it will continue to pursue the ‘multiple long term growth opportunities available’, it will ‘sharpen our short term focus on the core organic UK opportunity, creating a stronger platform for future growth’.
Founder and CEO Daniel O’Neill said: ‘There are clear and numerous pressures on consumers at present which are impacting discretionary spend across retail as a whole and kitchenware is no exception. Whilst we are still seeing lots of new customers discovering the ProCook brand and buying our products, it is clear that many are tightening their belts.’
THE EXPERT’S VIEW
Russ Mould, investment director at AJ Bell, commented: ‘The pots and pans seller joined the stock market after a period of success where the nation was stuck at home during lockdown and many people embraced their culinary skills.
‘Now we’ve got a squeeze on consumer spending and a lot of people have found they can only afford the essentials in life. So, the idea of buying a new cast iron frying pan or a new set of knives has been put on ice and ProCook’s growth expectations have been pared back.
‘Companies that deliver profit warnings in their first year as a listed business typically find it takes a long time to win back the market’s favour, as investors distrust anyone dishing out bad news so soon after floating.’
DISCLAIMER: Financial services company AJ Bell, referenced in this article, owns Shares magazine. The author of this article (James Crux) and the editor (Steven Frazer) own shares in AJ Bell.
