Leisure company issues profits warning

CARAVAN to motor home group Discover Leisure has issued a profits warning as a result of high interest rate charges and low sales.

The East Yorkshire based caravan retailer had warned in May the outlook for the second half was more challenging and said consumer confidence fell further in the summer period, which led to reduced demand across the UK leisure vehicle market.

In a trading update the company said debt had almost doubled to £22m from 11.2m last year.

Chairman David Morrow blamed the increase in debt on higher stocks and costs associated with its acquisition of the Cannock dealership.

Mr Morris said in response to the weaker market, the company had taken additional measures to gain market share, to reduce costs and to optimise working capital.

Revenue for the year was approximately £138m.

For the traditionally quieter first half of the new financial year, it expects the difficult trading conditions to persist. Discover will now focus on scaling back purchases of new motor homes as it tries to offload excess stock.

Mr Morrow said: “Fortunately we are now largely free from the extra load of acquisition integrations and, whilst we expect that the new online and rental businesses to continue growing, our focus will remain firmly fixed on cost, stock and cash management where we expect the current programmes to deliver an increasing scale of operational improvements.”

Discover Leisure shares dropped 1.5p to 2.375p following the update.

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