Just three weeks after releasing particularly positive full-year forecasts, French chain Maisons du Monde feels forced to significantly downgrade its guidances. The expected profit margin is almost halved, while the forecast for revenue turns from growth to a decrease.
“Conditions have materially worsened”
Earlier this month, the Nantes-based chain still said it felt able to keep up its positive profit and revenue projections. However, the tide has severely turned, as a trading update proves. The verdict is hard: the macro-economic and supply chain conditions have “materially worsened over the last few weeks”. As such, the earlier projections have to be updated, Maisons du Monde admits.
The positive top-line evolution that Maisons du Monde still felt possible earlier this month, has been turned into a “mid-single-digit negative” forecast. The French chain points to the high inflation in Europe, which causes consumer confidence and demand for ‘home and living’ products to drop. Moreover, the resurgence of Covid-19 in China “keeps generating serious bottlenecks” and costs for raw materials and energy only add to the sudden pessimistic mood. Add higher costs and lower revenue together and the outcome is clear: the projected EBIT margin is lowered from 9 % to about 5 %.
Still, the French chain thinks it can keep up its strategic plan released in November 2021, but the timing of certain targets – currently set at 2025 – may have to be extended. In the trading update, the French chain promises it will rigorously control its costs, while at the same time keeping up strategic investments. Maisons du Monde says it maintains the opening of a second logistics centre, as well as further investments in its marketplace.