July 11, 2018 / 6:29 AM / 6 days ago

Safestyle forecasts loss as margins erode; shares plunge

(Reuters) - Safestyle UK Plc (SFES.L) on Wednesday issued its second profit warning in three months, as higher costs chip away at the British windows and doors retailer’s margins, sending its shares to an all-time low.

Shares of the company slumped as much as 26 percent in early trading on the London Stock Exchange.

Safestyle forecast underlying pretax loss, and revenue below market expectations for the year ending Dec. 31, saying its gross margins have been impacted by higher digital marketing costs and sales commissions.

The Bradford-based retailer, which sells PVC windows and doors, has been struggling with a steady decline in sales volume amid rising inflation and dipping consumer confidence in Britain.

The company was forced to scrap its dividend in April, when it said its 2018 revenue and profit would be significantly below market estimates.

It also faced management changes in recent months as Chairman Peter Richardson resigned shortly after assuming the role. Former Mars Inc executive Mike Gallacher joined as Safestyle’s chief executive officer in May, taking over the post from Steve Birmingham.

The company’s order intake improved in recent weeks, but was still at a lower level than expected, while pricing was firm as the company implemented price increases, it said.

Safestyle also forecast 6 million pounds ($8 million) in one-off costs this year.

However, it expressed confidence in its medium- and long- term prospects as it expects material annual savings from its cost savings programme.

Reporting by Ismail Shakil in Bengaluru; Editing by Amrutha Gayathri

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