Victorian Plumbing shares fall 40% amid margin woe

Shares of Skelmersdale, Lancashire-based Victorian Plumbing Group plc, the online retailer of bathroom products and accessories that went public in June, fell about 40% on Thursday after it warned its gross margins may come under pressure as it attempts “to balance revenue growth with profitability in the short-term.”

As the share price fell, Victorian Plumbing chairman Philip Bowcock and senior independent non-executive director Damian Sanders bought 53,000 shares and 25,933 shares respectively at a price of 92p and 96p .

On Wednesday, Victorian Plumbing shares had been trading around £1.57.

The fall in the share price came despite Victorian Plumbing reporting that revenue rose 29% to £268.8 million in the year to September 30, 2021, with gross profit up 42% to £130.5 million.

After accounting for £9.4 million of exceptional costs relating to its IPO and share-based payments of £7.7 million, profit before tax fell 17% to £19.7 million.

Total orders rose 17% to 906,000, active customers rose 13% to 638,000, and average order value was up 10% to £297.

However, in its outlook section, Victorian Plumbing said: “As we reported in our full year trading update on 7 October 2021, we experienced more subdued market conditions during the summer months following the easing of restrictions, before customer demand improved somewhat during September.  

“Through the first two months of FY22, whilst consumers have continued to spend more on leisure and less on big ticket material homeware purchases, demand and revenue have been broadly the same as last year and 41% ahead of FY20.

“The adaptability of our supply chain and investment in-stock inventory means we are currently operating from a position of strength relative to others.

“Given the popularity of our own brand offering, we are able to absorb most of the current supply chain pressures.

“However, as we look to balance revenue growth with profitability in the short-term, gross margins may move closer to those achieved in FY20.”

Victorian Plumbing Group founder and CEO Mark Radcliffe said: “This has been a milestone year for Victorian Plumbing as we accelerated our growth, supported by the continued dedication and agility of colleagues around the business, and successfully completed our listing on the London Stock Exchange.

“Our distinctive brand and extensive choice of quality bathroom products have been key drivers in attracting consumers to our platform, whilst the strength of our supply chain and our investment in inventory means that the majority of our products have remained immediately available.

“Although the short-term outlook is difficult to predict as the world normalises from the events of the last two years, it is inevitable that consumer buying behaviour will continue to move online.

“As the UK’s largest online bathroom specialist retailer, Victorian Plumbing is uniquely placed to help consumers obtain exactly what they need for their dream bathroom.

“The board remains confident in the medium to long-term growth prospects for Victorian Plumbing.”