Evoke plc Chief Executive Per Widerstrom acknowledges that the company’s performance in the first half was not satisfactory, but believes it will be better for H2
Evoke reported a first-half revenue of PS862m in line with the profit warning issued by Evoke on July, but down 2% from last year. Widerstrom stated that this is behind Evoke’s original plan but the overall health of the company was improving.
He said, “We’re completely transforming the business.” While the change in scale is large, we must do it to achieve profitable growth on a mid- and a long-term basis and create value.
We have taken decisive, bold actions in order to improve the short-term performance of the trading business, while also investing in the capabilities of the group to create a step-change in value and to build a larger, more profitable and sustainable, and cash-generating, future.
Evoke stated that the UK retail sector saw a drop of 8% on an annual basis. The earnings were hit by these struggles as well as a less than expected return from marketing investments for UK Online and PS72m of costs related to 888’s US withdrawal.
The adjusted EBITDA fell 26% from the prior year, to PS115.5m. This represents a margin of 13.4%. The marketing costs for the first six months were PS16m (12%) higher than last year, with an online marketing ratio temporarily raised to 25%. Evoke stated that second half marketing costs would be lower by between PS35m to PS40m compared to H1 due to a more effective marketing strategy.
The company stated that the review of the strategy, which led to Evoke’s new positioning and brand name has left the business better positioned.
As we continue to improve our offering, “clear and robust brands positions that are focused on the core needs of customers, along with product enhancements, enable a continuous shift in marketing from promotions-led approach towards product-led.”
Green Shoots for Evoke H2?
Evoke is expecting to meet its prior guidance for a 5%-9% revenue increase in the second quarter of this year. The US withdrawal, along with an optimized business structure will help to increase profitability. The C-suite has been completely restructured, and nine out of eleven executives were replaced during H1.
The existing expectations for FY2025 remain unchanged. The group expects an EBITDA of 20% in 2025, with medium-term growth rates of 5-9%.
Widerstrom continued, “We have a plan with a vision and clear financial goals.” As a result our strategic progress, and the improvements already made in the business I am more confident that we will deliver our value creation and drive sustainable profitable growth for the next years.
