Shares of Glasgow-based retail marketing company SpaceandPeople fell about 25% after it said trading during the key month of December was poorer than expected.
In a trading update ahead of its results for the year ended December 31, which will be released on March 27, SpaceandPeople said revenues for the year from its promotional divisions and German retail division were in line with management expectations.
However, its retail merchandising unit sales were “significantly lower” than had been anticipated with demand over the normally lucrative Christmas period particularly weak.
Revenue from its mobile promotion kiosk business was lower than budgeted for as the roll out of units to new venues was delayed from the fourth quarter of 2016 into 2017 due to site availability, although at £1.6 million this still represented a 138% increase on the previous year.
“Overall, revenue for the year was £700k lower than expected at £10.2 million and the impact of this on the profitability of the group is a reduction of approximately £425k from market expectations,” said the company.
“Additionally, the group has decided to make provisions for the restructuring of both the UK and German retail divisions with £90k of restructuring costs and £150k of provision for potential bad debts as we enter the final year of our contract with ECE.
“Therefore, the group expects the results for 2016 to be close to break even before non-recurring costs and discontinued operations and a loss of circa £650k after recognising all costs.”
Nonetheless, in its outlook for 2017, the company said that its board had sufficient confidence “that the group will not only return to profitability in 2017 but will also meet existing broker expectations for 2017.”