Shares in McBride have tumbled as the household cleaning product manufacturer warned of a potential slowdown in the booming demand for own label in supermarkets.
A full-year trading update from the company, which makes private-label and contract manufactured products for the domestic household and professional cleaning and hygiene markets, said it had continued to build on the significant improvement in financial performance achieved in recent years.
Adjusted operating profits for the year to June 2025 are expected to be in line with expectations.
Group revenues are set to be 0.7% higher than the prior year, with total volumes up 4.3%, made up of a rise in private label volumes of 1.4% and contract manufacturing volumes up 48.9%, driven by the full-year impacts of significant new long-term contracts.
However, McBride added that while demand for private label remained “strong”, there were signs the market had stabilised at current levels.
“In light of continuing inflationary pressures, many retailers are seeking value to support their consumer proposition with an increased requirement for cost out actions to support lower market pricing,” the business said.
Shares in McBride by 12.8% to 132.4p as markets reacted to the statement.
AJ Bell investment analyst Dan Coatsworth said there was big demand for supermarket own-brand products in 2022 and 2023 when the UK experienced a sharp rise in the rate of inflation.
“As a provider of white label goods to supermarkets, cleaning products specialist McBride enjoyed a purple patch as shoppers shunned big brands and went for the cheapest options,” he added. “It’s unfortunate that McBride has now disappointed the market precisely at the point where inflation has reared its ugly head again.
“There is a line in its trading update that implies the supermarket own-brand boom is past its peak and is now reverting to more normal trends. Investors have taken that remark to mean McBride’s glory days are over.
“Given we’ve just seen inflation hit its highest level in a year-and-a-half as food prices rise again, there is a real chance that shoppers will once again think twice about what they put in their basket. That would imply McBride could bounce back, yet investors don’t seem to share this view given how the share price has crashed on the update.”
The update follows a surprise jump in the headline rate of UK inflation in the 12 months to June, to 3.6%.
McBride was hit with a string of profits warnings in 2021 and beyond as it struggled to recoup rising input costs at the time. It left the share price languishing at lows of 16p by 2022.
The group has now turned its fortunes around after passing on price rises to customers and benefiting from shoppers switching to own-label products.
In January, McBride announced it intended to reinstate annual dividends in the current financial year, with more details to be announced when it publishes the results in September.
No comments yet