Unfortunately for its shareholders, the PAS Group Ltd (ASX: PGR) share price has been amongst the worst performers on the market today.
At lunch the retailer's shares are down 13% to 50.5 cents.
Why is it tumbling?
Like many retailers, lower traffic and an elevated promotional environment have weighed heavily on the company's performance.
As a result, this morning the company advised that retail sales at its Black Pepper and Review brands are below management's expectations.
Furthermore, order reductions and delivery timing changes for the wholesale businesses of Black Pepper and Designworks have also impacted the company.
In light of this, management expects full-year EBITDA from continuing operations to be in the range of $18.5 million and $20 million.
With first-half EBITDA from continuing operations coming in at $11.6 million, this means disappointing second-half EBITDA of between $6.9 million and $8.4 million.
Should you buy shares on the cheap?
Whilst PAS Group does have some quality retail brands in its portfolio such as the fast-growing Jets brand, I can't see the retail environment improving any time soon.
Especially if Amazon launches in Australia later this year. This could lead to the promotional environment intensifying, impacting the margins and profits of many retailers.
Because of this I would suggest investors give PAS Group a miss at this point, despite how cheap it looks.
Investors looking for retail shares with strong growth prospects despite the tough trading conditions could do a lot worse than an investment in Premier Investments Limited (ASX: PMV) or Bapcor Ltd (ASX: BAP) in my opinion.
