Marks Electrical Group Plc Cuts FY26 EBITDA Guidance to £1.7m Amid Sales Slump

Marks Electrical cuts FY26 EBITDA guidance to £1.7m: what went wrong and what comes next

Marks Electrical has issued a downbeat Q2 update for FY26, confirming a tricky first half and cutting full-year adjusted EBITDA guidance to approximately £1.7 million. The retailer has stuck to its pivot back to premium categories, but weak consumer demand, higher costs and softer average order values have squeezed margins and delivery economics.

There is a glimmer of optimism: management expects H2-FY26 revenue to exceed H2-FY25 as the business invests in stock ahead of peak trading. However, operating leverage has not kicked in yet, and the Board has delayed a decision on the interim dividend.

Key takeaways investors need to know

Metric / Update	Detail
FY26 adjusted EBITDA guidance	Approximately £1.7 million
Revenue trend in H1-FY26	Lower revenue in Q1 and Q2 year on year
H2 outlook	Revenue expected to exceed H2-FY25 as stock is increased
Dividend	Interim dividend decision delayed; final dividend to be reconsidered at FY results
Cost pressures	Higher technology and ERP costs, higher employee costs, elevated distribution and overheads
Next milestone	Interim Results for six months to 30 September due 13 November 2025

Why sales and margins slipped in H1

The company flagged a weak Q1 at the June results, and that pattern persisted into Q2. Both the Major Domestic Appliances (MDA) and Consumer Electronics (CE) markets are down year on year, with customers trading down, bargain hunting and delaying big-ticket purchases. That has pushed down average order values, which matters because every delivery van run costs roughly the same whether the basket is £300 or £800. Lower ticket values mean higher delivery cost as a percentage of sales.

On top of this, Marks Electrical is shouldering higher employee costs and increased technology spending, including ongoing costs for its new ERP system. With revenues soft, those relatively fixed costs have reduced operating leverage – in plain English, the business has not been able to spread fixed costs over enough sales to protect margins.

ERP, operating leverage and premium pivot – in brief

• Adjusted EBITDA: a measure of profit that strips out interest, tax, depreciation, amortisation and certain adjustments to show underlying performance.
• Operating leverage: the effect where profits rise faster than sales once fixed costs are covered. It works both ways – weaker sales can hit profits disproportionately.
• ERP system: enterprise software that integrates finance, operations and inventory. It is costly upfront but can improve efficiency once scaled.
• Premium pivot: focusing more on higher-end brands and products. That can lift margins and average order values over time, but it may dampen volume in a price-sensitive market.

Management actions to steady the ship

Management is prioritising profitable market share rather than chasing volume at any price. They have:

• Taken measures to control distribution costs and overheads, while keeping next day delivery and installation service intact.
• Started optimising transport operations and reallocating marketing spend to the best-returning channels.
• Made a strategic decision to invest into stock ahead of the peak season, aiming to capture demand and improve H2 revenue.

The ERP roll out is described as performing well, with expected efficiency benefits as the business returns to growth. The key question is timing – when those efficiencies and the premium pivot start to lift average order values and margins.

H2 expectations: upside potential with execution risk

Marks Electrical expects revenue in H2-FY26 to exceed H2-FY25, helped by a more balanced product mix and greater stock availability in the peak period. If achieved, that should improve operating leverage versus H1, given the cost base already being absorbed.

However, the consumer remains highly price conscious, and both MDA and CE markets are still subdued. The plan relies on cleaner execution in transport and marketing, and on the premium mix holding up through peak trading. Inventory investment carries risk if demand underwhelms, although good availability can be a competitive advantage when rivals are lean on stock.

Dividend paused for now

The Board has delayed the interim dividend decision and will revisit both the interim and the quantum of any final dividend at the full-year stage. That is consistent with the guidance cut and focus on cash. It also signals that near-term capital allocation is skewed toward inventory and the ERP-driven efficiency programme.

Josh’s view: a tough reset, but the playbook is clear

This is a reset statement. The guidance cut to approximately £1.7 million of adjusted EBITDA and the dividend delay are clearly negative. Cost inflation and the failure to realise operating leverage in H1 have done the damage, and the macro picture is not helping.

On the positive side, the strategy is coherent: hold service levels, push premium, fix transport and marketing efficiency, and use the ERP to sharpen operations. If H2 sales beat last year and average order values stabilise, the model should regain some operating leverage. The risk is that the consumer stays tight-fisted for longer, delaying margin recovery.

What to watch between now and November

• Interim Results on 13 November 2025 – look for revenue cadence through Q2, gross margin trend, delivery cost per order and any early ERP efficiency gains.
• Average order value – any stabilisation or uplift would support delivery economics and margins.
• Stock turns in peak trading – strong availability is good, but inventory discipline matters if demand is patchy.
• Marketing payback – evidence of improved allocation to higher ROI channels.
• Commentary on MDA and CE market trends – indications that the year on year declines are easing.

Bottom line

Marks Electrical is absorbing a difficult first half and trimming expectations. The H2 set-up leans more positive, with a stock-backed push into peak and a premium mix that should help margins if demand cooperates. For now, this is about disciplined execution and cost control while waiting for the operating leverage to reappear.

With a nationwide delivery and installation platform and a vertically integrated model, the long-term opportunity remains intact. Near term, eyes on 13 November for proof points.