REG - Sosandar PLC - Full Year Trading Update

SosandarAnnouncement

16/04/2024 07:00

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RNS Number : 6949K  Sosandar PLC  16 April 2024

 Date:             16 April 2024
 On behalf of:     Sosandar plc ('Sosandar' or 'the Company')
 Embargoed until:  0700hrs

 

Sosandar plc

Full Year Trading Update

Strong H2 with FY24 revenue growth of 9%, continued margin growth and strong
cash position to execute store strategy

 

Sosandar plc (AIM: SOS), one of the fastest growing fashion brands in the UK,
creating quality, trend-led products for women of all ages, provides the
following trading update for its financial year ended 31 March 2024.

 
 

Full Year Highlights:

 

 ·             Revenue of £46.3m, up 9% year-on-year (FY23: £42.5m)
 ·             Improved gross margin of 57.6% (up from 56.1% in FY23) reflecting the planned
               reduction in certain price promotional activity ahead of a selective store
               roll out in the UK
 ·             As a result of a substantial positive swing in PBT from H1 (£1.3m loss) to an
               expected profit of £1.1m in H2, FY24 will be broadly in line with market
               expectations* with a marginal loss of £0.2m expected to be reported for the
               year overall
 ·             Strong cash generation in H2, resulting in an improved net cash position of
               £8.3m as at 31 March 2024 (£7.7m as at 31 December 2023)
 ·             Post year-end, April trading has been strong with continued improvement in
               profitability driven in particular by gross margin

 

Our brand and unique product range continue to resonate with our customers, as
evidenced by the strong growth that we achieved in H2 FY24 despite the
challenging market backdrop, where Sosandar has outperformed many peers and
wider industry statistics. Our focus on margin improvement is also beginning
to deliver, with gross margin in H2 FY24 at 59.6% (H2 FY23: 57.8%). The
significant improvement year-on-year reflects our strategic decision to
introduce a more targeted approach to price promotional activity ahead of
select store openings, resulting in less frequent and less deep discounts. As
a result, H2 FY24 saw the Company deliver a substantial upswing in
profitability, following a £1.3m loss in H1, demonstrating the impact of
improved revenue and gross margin. FY24 trading overall was broadly in line
with market expectations*.

 

Due to ongoing careful working capital management, with ongoing focus on stock
purchasing, the cash position as at 31 March 2024 exceeded market expectations
at £8.3m. This further strengthens the Company's ability to execute the next
stage of growth, including, as planned, the roll out of select physical retail
stores during FY25.

 

Customers continue to interact with the Company through its multiple routes to
market. Sosandar.com remains the bedrock of the Sosandar brand and this
channel was strengthened with the launch of our app in July, which has
performed very well. Trading with the Company's well-established third-party
partners has continued to be strong, with the success of our product resulting
in Sosandar being one of the top selling brands across all third-party
partners including Next and M&S. This has helped to drive further growth
in brand awareness and led to increased partner opportunities, such as the
collaboration launched with Freemans in September 2023. The Company's first
launches internationally, with The Iconic in Australia and The Bay in Canada,
have performed in line with our expectations, and following the partnership
with Global-e, further validated our expectation that Sosandar's product range
will resonate with fashion conscious women across the globe.

 

Our brand strength and loyal customer base, both domestically and
internationally, continues to grow strongly. The Board remains focused on
building the Group's addressable market and delivering profitable growth. With
over 60% of the +£60bn p.a. clothing market in the UK being transacted in
physical stores, we remain confident that the opportunity available to
multi-channel retailers far exceeds that of an online pureplay business. As
previously disclosed, providing an instore offering will help achieve both
these core strategic objectives and is therefore an essential next step in
Sosandar's growth journey.

 

Substantial progress towards opening the Company's first stores has been made,
with several shops identified in top tier locations at various stages of
progression, including some now reaching the latter stages. Our primary focus
is to ensure that Sosandar stores are situated in the right position in
affluent, thriving locations where Sosandar customers over-index. The exact
timing of first openings will, accordingly, be determined by our disciplined
approach to ensuring 'right price, right location' and that all other aspects
are in place to deliver a fantastic in-store customer experience. Overall, the
Company is on track with all elements to execute the store rollout as
expected.

 

The Company's continued focus on cash generation and its strong balance sheet
means that the rollout will be delivered entirely from our existing financial
resources.

 

The planned roll out of our multi-channel model is specifically designed to
deliver profitable growth and accelerate delivery of our medium-term target of
£100m+ revenues and a 10% margin.

 

Conference call

 

Sosandar is hosting a Q&A call for analysts and investors today at 8:15am
to discuss the Trading Update. If you would like to register for the call,
please follow this link:

https://us02web.zoom.us/webinar/register/WN_wydUlralRn2bCJW9pgHuRA
(https://us02web.zoom.us/webinar/register/WN_wydUlralRn2bCJW9pgHuRA)

 

* Sosandar believes that market expectations for the year ended 31 March 2024
are currently revenue of £46.8 million and PBT of £0.1 million.

 

Ali Hall and Julie Lavington, Co-CEOs commented:

"We have delivered a robust financial performance for FY24, delivering a
profitable second half, accelerating revenue growth whilst at the same time
growing our margin and generating cash. This performance has been achieved
against one of the most challenging backdrops our industry has experienced and
is testament to how our customers feel about our on-trend, affordable, long
lasting, lifestyle appropriate clothes.

 

The strength of our brand and unique product range remain the key drivers of
our success and keep our customers returning to us for their wardrobe needs.
We are incredibly proud to see the success that our Sosandar clothes are
having in the UK's biggest retailers and through our first partnerships
internationally.

 

We enter the new financial year well placed, with a strong cash position in
order to execute the next stage of our growth strategy. April trading has been
strong with continued improvement in profitability driven in particular by
gross margin. We fully expect that we will deliver more milestones in FY25 as
we open our first physical retail stores and continue to take the Sosandar
brand to more customers across the UK and worldwide."

 

 

Enquiries

 Sosandar plc                                          www.sosandar.com (http://www.sosandar.com)
 Julie Lavington / Ali Hall, Joint CEOs                c/o Alma PR
 Steve Dilks, CFO
 Singer Capital Markets                                +44 (0) 20 7496 3000

 Peter Steel / Tom Salvesen / Alaina Wong
 Alma Strategic Communications                         +44 (0) 20 3405 0205
 Sam Modlin / Rebecca Sanders-Hewett / Kinvara Verdon  sosandar@almastrategic.com (mailto:sosandar@almastrategic.com)

About Sosandar plc

Sosandar is one of the fastest growing women's fashion brands in the UK
targeting style conscious women who have graduated from lower quality,
price-led alternatives. The Company offers this underserved audience
fashion-forward, affordable, quality clothing to make them feel sexy,
feminine, and chic. The business sells predominantly own-label exclusive
product designed and tested in-house.

Sosandar's product range is diverse, providing its customers with an array of
choice for all occasions across all women's fashion categories. The company
sells through Sosandar.com and has a number of high value brand partnerships
including with Next and Marks & Spencer.

Sosandar's success has been built on an exceptional product range, seamless
customer experience and impactful, lifestyle marketing, all of which is
underpinned by combining innovation with data analysis. Our growth strategy is
focused on continuing to grow brand awareness and expand our addressable
market and routes to market, reaching customers wherever they wish to
shop. This is achieved both through direct to consumer channels and through
chosen third party partners.

 Sosandar was founded in 2016 and listed on AIM in 2017. More information is
available at www.sosandar-ir.com (http://www.sosandar-ir.com)

 

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