CMO Group PLC Trading Update (4958I)
02 Dicembre 2022 - 5:03PM
UK Regulatory
TIDMCMO
RNS Number : 4958I
CMO Group PLC
02 December 2022
CMO Group Plc
("CMO" or "the Group")
Trading Update
CMO Group PLC, the UK's largest online-only retailer of building
materials, today announces an update on trading for the period up
to 31 October 2022 and its expectations for the full year.
Since reporting its interim results on 30 September 2022, the
Group has continued to achieve sales growth in H2 to GBP29m (period
to date, excluding carriage), 15% over the same prior year period
and LFL sales of +5%, despite the ongoing challenging
macro-economic climate. Encouragingly, the Group continues to build
market share, further disrupting the traditional building products
market.
Stock valuation revisions at Total Tiles
As part of its ongoing and periodic stock reconciliations, the
Company has identified an isolated issue, resulting from human
error, in cost and consequent pricing update procedures carried out
at Total Tiles. This resulted in miscalculation of the stock
valuations at Total Tiles at the half year and, consequently, an
overestimation of achievable margins in this business during the
second half.
Following thorough investigation, the Board has concluded that
the required revisions to the Total Tiles stock valuations will
result in a c.GBP0.7m reduction in FY22 EBITDA. It is expected that
the majority of this one-off adjustment will impact H2 2022 EBITDA,
with a GBP0.2m reduction in H1.
Swift action was taken upon identifying this issue and an
improvement plan has been implemented to rectify the issues caused,
which is expected to improve margins going forward. The changes
include a correction to the cost and retail prices of Total Tiles
products, a new purchasing team, and appropriate changes to our
operations to ensure that this is an isolated occurrence, and the
situation cannot recur.
Balance Sheet
Cash balances at the end of November of GBP5.5m. The year-end
cash balance is anticipated to be c.GBP5m, with a forecast net cash
position of c.GBP0.2m and an undrawn working capital facility of
GBP4m, providing the Group with a sound funding position.
Current trading and outlook
The ongoing macro-economic headwinds mean that although revenue
in the year to date is running ahead of last year's comparative
period, we do not expect fulfilment of the order book to unwind at
the usual pace in the balance of the year because of stock
availability and customers extending the completion times of their
projects. Further, changes in customer buying patterns have shifted
some product sales to lower margin categories. We anticipate this
trend continuing as the market adapts to the cost-of-living
challenges.
We have therefore, when taking into account these trends in
consumer behaviour towards lower margin product mix and the impacts
of the macro-economic situation, coupled with the one-off cost of
the stock revaluation at Total Tiles, revised our expectations for
the full year. FY22 Adjusted EBITDA is now expected to be in the
region of GBP2.2m, with expected revenues of approximately
GBP84m.
Our strategic growth projects of brand evolution, the homeowner
project and development of a new superstore vertical are all
progressing well and are on budget and to schedule. CMO remains a
profitable growth company, backed by its unique proposition of
direct sales to customers, a product range of over 100,000 SKUs and
an efficient direct service through its dropship model which will
enable the Group to continue to disrupt the traditional market and
drive further growth.
Dean Murray, CEO of CMO Group PLC said:
"While the one-off revision in stock valuation in our Total
Tiles operation is frustrating, it is an isolated issue which the
Board has taken immediate and decisive action to rectify.
We have a differentiated and proven model which continues to
take market share. We have also continued to grow sales across the
Group in the second half, further underlining the success of our
pure play online model in disrupting the marketplace.
Whilst we remain mindful of the economic backdrop, we are
confident that both individuals and tradesmen will continue to
become ever more digitally savvy and that our proposition will
continue to gain traction"
2 December 2022
Enquiries:
CMO Group PLC Via Instinctif
Dean Murray, CEO
Jonathan Lamb, CFO
Liberum Capital Limited (Nominated Adviser Tel: +44 20 3100
& Broker) 2000
Andrew Godber
Lauren Kettle
Cara Murphy
Instinctif Partners
Matthew Smallwood Tel: +44 20 7457
2005
Justine Warren Tel: +44 20 7457
2010
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