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(Sharecast News) - Kitwave Group warned on Thursday that full-year profitability was likely to come under pressure after weaker-than-expected demand in hospitality and cost inflation weighed on margins in the first quarter.
The AIM-traded wholesaler said revenue for the three months ended 31 January was in line with the same period in the prior year.
However, lower demand in the hospitality sector led to an unfavourable revenue mix, negatively impacting gross profit margin.
Profitability was further affected by continued investment in the group's South West depot and ongoing overhead inflationary pressures, including higher employer National Insurance contributions and increases in the National Minimum Wage.
As a result, adjusted operating profit for the period was materially behind the board's expectations.
Kitwave noted that the January quarter typically represented only a small proportion of its total annual profit.
Nonetheless, the board said it expected margin pressure to persist for the rest of the financial year to 31 December and remained cautious on the outlook for the balance of the year.
At 1143 GMT, shares in Kitwave Group were down 1.35% at 292p.
Reporting by Josh White for Sharecast.com.
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