Shares in online TVs-to-washing machines seller Marks Electrical (LON:MRK) fell on the news CFO Tom Pallatt is leaving the business.
Pallatt’s looming departure comes not long after the Competition and Markets Authority (CMA) found Marks Electrical had charged customers for extra services without their express agreement.
The competition watchdog fined the electrical retailer £720,000 fine and ordered it to ‘provide consumer redress’ of around £600,000 to affected customers.
Gap needs plugging
Whether Pallatt jumped or was pushed is hard to know. However, his impending departure is another headache the board could have done without. Marks Electrical has kickstarted the process to appoint a successor to Pallatt.
The company said: ‘Tom, who remains a director of the company, will continue to fulfil his current role, which will include supporting and facilitating a smooth transition. A further announcement will be made as appropriate.’
News of Pallatt’s exit comes just weeks after Leicester-based Marks Electrical delivered disappointing FY26 results. Revenue was down 7.9% to a worse than expected £107.9 million amid tough market conditions. And with competition in the electricals market remaining fierce, Marks Electrical suffered an 80 basis point decline in gross margin to 23.6%.
Brighter days ahead?
On the positive side of the ledger, this was also a year in which Marks Electrical refocused on what it does best. Sell premium major domestic appliances (MDA) with next day delivery.
Pre-tax losses narrowed from £1.71 million to £366,000 thanks to much improved H2 trading including a good Christmas performance. The company also benefited from ‘decisive actions taken’ in terms of improving operational efficiencies and taking out costs.
Cavendish maintained its ‘buy’ rating and 60p price target on Marks Electrical. The broker said: ‘The conclusion of the CMA investigation will result in a £1.3 million exceptional cost for FY27, but it provides clarity and allows Marks to move forward.’
The broker added: ‘The FIFA World Cup is a helpful tailwind for television sales and should provide some benefit in H1 FY27.’
Shares in Marks Electrical are down 25% over the past year and 60% lower on a five-year view. Though it is currently out of favour, there is lots to like about the company.
Founded in Leicester in 1987 by Mark Smithson, the company has grown into a nationwide online retailer with a good growth track record. We also think Marks Electrical will benefit as the FIFA World Cup boosts demand for TV and sound systems.
That being said, Pallatt’s departure is unnerving. And turnaround progress could be interrupted by weak consumer confidence, with inflation and unemployment impacting disposable income.
We believe UK electricals leader Currys (LON:CURY) is better placed to weather the storm. Currys benefits from high brand awareness, long-term supplier relationships and a strong balance sheet. And the FTSE 250 firm, which holds around 75% of the market for AI-enabled laptops, believes the opportunity in front of it is ‘bigger than it has ever been’.
Read the press release here: https://group.markselectrical.co.uk/investors
