Shares in Ellies crashed more than 12% after it warned of a widening interim loss per share as it grapples with a tough trading environment where consumers are under pressure amid soaring inflation and fuel costs.
At the same time, the 43-year-old electronic goods group was also affected by restructuring process that resulted in an "impact of R18 million in respect of retrenchment costs".
The company - which describes itself as a wholesaler, importer and distributor of LED lighting, electronic and solar solutions - said that it expected a loss per share for the six months ended October of between 3.95c and 4.73c per share, compared with the 3.06c loss in the previous financial year. It said it expected a headline loss per share of between 4.17c and 4.99c, compared with the loss of 4.36c previously.
Ellies, which said it was implementing a turnaround strategy, said the general trading environment continued to be constrained with costs rising due to high global inflation, as well as soaring fuel costs.
However, it said it had seen an improvement in its trading results with revenue increasing 5.6%, compared with the same period last year, while gross profit had also marginally improved over the prior interim period.
By 16:30 on Monday the company's shares were trading 12.5% lower at 14c.
As far as its turnaround plan was concerned, it said it expects "major components of the plan to be completed before the year-end at 30 April 2023".
'The board and management expect to see substantial savings because of the initiatives implemented and it is anticipated that the group will begin benefitting from the savings in the latter part of the financial year."
It said the turnaround would also position Ellies as a 'smart infrastructure business' focused on the alternative energy, water storage and harvesting, as well as smart home technology.
Ellies also said it was finalising an agreement with its bankers to restructure its working capital facilities to help ease constraints on working capital.