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(Sharecast News) - Marks Electrical posted a plunge into the red on Wednesday, weighing heavily on the shares, as it continued to pivot away from cheaper brands.
Revenues at the online electrical retailer rose 2.6% to £117.2m in the year to 31 March.
However, earnings before interest, tax, depreciation and amortisation fell to £4.2m from £5m, after the margin decreased by 80 basis points to 3.6%. Marks said the margin was "lower than we set out to achieve, but positive in light of the significant changes made across the business throughout the year".
Pre-tax losses were £1.7m, compared to pre-tax profits of £616,00 a year previously.
As at 0930 BST, shares in the AIM-listed firm were down 8% at 58p.
During the year, Marks introduced a new enterprise resource planning system and exited the Euronics buying group.
It also refocused on the premium segment, moving away from lower margin entry-priced products.
Chief executive Mark Smithson said: "Over the past two years, consumers have been highly price-conscious, which, given our premium focus, continues to have an impact on our average order value, resulting in customer order volumes growing faster than revenue."
However, he continued: "During a challenging year for the group, and in a market where consumers continue to remain price conscious, I am produce of the strategic and operational progress we have made.
"As we focus on the right product hierarchy and sales channels, we expect this to have longer-term benefits on unit economics, and as comparable ease in later quarters, we expect a return to revenue growth during the 2026 full-year."
Marks said first quarter 2026 revenues had been lower year-on-year, as expected.
However, it added: "We anticipate improving revenue growth and higher gross margin that the prior year, enabling us to reiterate our full-year guidance."
Canaccord Genuity, which has a 'buy' rating on the stock, said: "2025 marked a period of strategic change [for Marks], investing...to build the foundations for the business to efficiently scale into a much larger business.
"This is typical of any small, high-growth business, and with the investments now complete, we expect revenue growth and margins to begin to recover, providing significant potential upside for shareholders."
Canaccord is forecasting 2026 EBITDA of £4.4m on revenues of £119.3m.
