REG - Sosandar PLC - Trading Update & Progress on Growth Strategy

SosandarAnnouncement

12/04/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230412:nRSL8884Va&default-theme=true

RNS Number : 8884V  Sosandar PLC  12 April 2023

 Date:             12 April 2023
 On behalf of:     Sosandar plc ('Sosandar' or 'the Company')
 Embargoed until:  0700hrs

 

Sosandar plc

Trading Update & Progress on Growth Strategy

 

A milestone year, delivering revenue up 44% YoY and first full year of
profitability

 

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 2023.
 

Highlights for the financial year ended 31 March 2023:

 

 ·             Revenue of £42.5m, up 44% year-on-year (FY22: £29.5m)
 ·             First full year of profitability, delivering PBT of at least £1.6m, a
               substantial positive swing of £2.2m vs £0.6m loss in FY22
 ·             Gross margin maintained at 56.1% (FY22: 56.0%) despite growth in revenue
               through lower margin wholesale channel
 ·             Unique product continues to resonate with loyal customer base through
               Sosandar.com:

               o  Number of orders increased by 22% to 620,977 of which 148,382 were from
               brand new customers and 472,595 were from existing customers

               o  Conversion rate increased to 4.1% from 3.9%

               o  Average order value up 8% to £97.27 (FY22: £90.39)

               o  Number of active customers increased 19% to 264,832

               o  Average order frequency increased 3% to 2.34 times per annum
 ·             Performance of third party partners continues to go from strength to strength,
               and successful launch with Sainsbury's in Q4 FY23 with significant combined
               contribution expected in the current financial year and beyond
 ·             Ongoing planned investment in inventory to facilitate further growth,
               following equity fundraise in February 2023
 ·             Accelerated investment in strategic growth initiatives in the final quarter of
               FY23 to capture further market share focused on:

               o  Operations - including key hires

               o  Technology platform

               o  International strategy
 ·             Net cash of £10.5m as at 31 March 2023 (£4.2m as at 30 September 2022),
               following the successful equity fundraise of £5.5 million of net proceeds in
               February

 

 

 

Strong financial performance

 

Following on from a record Q3, January and February trading at sales and gross
margin level was in line with the Board's expectations and as the Spring /
Summer product started to land through March, the Company saw increased demand
with sales for the month ending 32% up YoY against March FY22.
 

 

 

 

Sosandar has continued to deliver on its growth strategy, demonstrated by
revenue, gross margin, scale economies and profit before taxation ("PBT") all
increasing substantially year-on-year. Delivering such strong growth over the
year, despite the challenging consumer backdrop, once again proves Sosandar's
ability to deliver a unique quality product offering and highly effective
marketing strategy, that resonates with its customer base.

 

 

Accelerated investment in growth initiatives

 

In order to capitalise on the strong trading in FY23 and prepare for further
momentum in FY24, the Company brought forward investment in some growth
initiatives in the latter part of Q4 FY23 that were originally planned for
FY24. These investments are centred around operations, technology platforms
and international strategy, which will help support and develop the Company's
future growth initiatives. FY23 PBT is, as a result, marginally below market
consensus*, predominantly due to the bringing forward of people and
recruitment costs. The Company is fortunate to have found the right people in
the latter part of FY23 and this will enable it to capitalise on the
opportunities ahead quicker.

 

These hires have further strengthened Sosandar's operational capabilities and
include the recruitment of an ecommerce Director, Commercial International
Director and Head of Operations. Their significant experience will help the
Company continue to execute its growth strategy as it enters into its next
phase of development and invests for future growth.

 

To ensure that Sosandar customers can engage with the brand through as many
channels as possible and its technology platform is constantly evolving, the
Company has commenced the development of a mobile app which is expected to be
launched in Q2 FY24. In addition, the Company has also invested in
personalisation and segmentation tools for Sosandar.com. Both of these
developments will further underpin customer acquisition, retention, order
frequency and average order value ("AOV"), as well as build the infrastructure
to take advantage of international opportunities.

 

The Company has been exploring and researching opportunities to serve its
targeted international customer base whilst remaining conscious of managing
costs and implementation risk. Following this, Sosandar announces that it has
signed an agreement with Global-e, the world's leading platform to enable and
accelerate global, direct-to-consumer, cross-border ecommerce, that will allow
the Company to transact and fulfil orders worldwide in a cost-effective
manner. This offering is expected to go live in Q1 FY24. In addition, Sosandar
is in active dialogue with a number of potential international third-party
partners and expects to be able to provide an update on this in the coming
months.

 

Unique product continues to resonate with loyal customer base

 

The Company's unique product range continues to resonate with its target
audience and has driven resilient growth with both new and repeat customers.
The planned fast-tracked development of key product lines was successful,
resulting in all identified lines meeting or exceeding management
expectations. Across the period, every product category experienced growth,
with knitwear, formal tailoring, coats and partywear performing exceptionally
well throughout the Winter season. The new launch of categories, such as
summer occasion wear and swim and beach wear, have had a positive start and
are expected to be some of the fastest growing areas for the Group in H1 FY24.

 

Third party partners continue to progress from strength to strength

 

The period under review has seen another robust trading performance across
both the Sosandar website and via third party partners. Sosandar.com is the
anchor of the Company's success and is the lifestyle hub where customers
receive the most diverse choice and constant newness. Trading with our now
well-established third party partners, John Lewis, Marks and Spencer, Next,
The Very Group and JD Williams, has been extremely strong, with a record
quarter for the Company delivered through third parties in Q3 FY23 followed by
a strong Q4. Throughout the period, the amount of stock allocated to each
partner was increased to meet the rising demand generated through these
channels.

 

Successful launch with Sainsbury's online and progress for in-store launch on
track

 

In January, the Company announced that it had entered into an agreement to
sell a curated collection of its products through J Sainsbury ('Sainsbury's').
Through this wholesale agreement, a selected range has begun to be sold online
in March with promising results. The in-store launch is on track to commence
with our best-selling styles and accessories in selected stores in August
2023, in time for the important Autumn/Winter season, as Sainsbury's increases
its collaborations with fashion brands to provide new and existing customers
with a broader selection of products. The partnership, which includes the
Company's first in-store presence, provides Sosandar with the opportunity to
become a truly omnichannel retailer.

 

Strong cash position

 

The Company successfully raised £5.5 million (net of expenses) in February
2023, with both existing and new investors showing support for the business
and its plans for future growth. The proceeds will enable the Company to:

 

-       accelerate the execution of its omnichannel strategy through
further investment in stock;

-       increase provision of Sosandar's product range in-store with
third party partners;

-       create further balance sheet headroom to fast-track other growth
initiatives; and

-       accelerate investment in the Company's proven customer
acquisition model.

 

* The Board believes that consensus market expectations for the year ended 31
March 2023 are revenues of £42.45m and PBT of £1.9m.

 

 

 

Conference call

Sosandar is hosting a Q&A call for analysts and investors today at 8:30am
to discuss the Trading Update. If you would like to register for the call,
please follow this link:  https://bit.ly/SOS_FY_TU (https://bit.ly/SOS_FY_TU)

 

Ali Hall and Julie Lavington, Co-CEOs commented:

 

"We are delighted to be reporting a milestone year. Sosandar has grown from a
true start-up business just six years ago to a brand which is delivering
multi-million-pound revenue and is profitable. This growth has been delivered
against a backdrop of highly challenging macro-economic conditions and our
sustained performance against this backdrop is testament to how well our
product resonates with our customers. We are incredibly proud to have Sosandar
clothes now being sold in the UK's biggest retailers, and we have now built
the infrastructure to start serving our target customers internationally. We
would like to thank all of our team for their hard work and dedication, this
performance wouldn't have been possible without them.

 

We continue to invest in and expand our product range, offering our customers
an even greater selection of on-trend, affordable, long lasting, lifestyle
appropriate clothes. We are already seeing strong demand for our fast-tracked
ranges of summer occasionwear as well as beach and swimwear. In addition, our
performance with selected third-party partners continues to go from strength
to strength and we were delighted to secure a new partnership with another
renowned British retailer, Sainsbury's. This partnership has elevated our
strategy from pureplay to an omnichannel brand and will enable us to provide
our large but underserved demographic with more opportunities to purchase our
unique and diverse products.

 

While the macro-economic environment remains challenging, and we remain highly
vigilant, we continue to demonstrate that our differentiated model is capable
of achieving sustained profitable growth. We remain confident in the long-term
opportunity for Sosandar, as reflected in Q4 FY23 in the acceleration of our
investment in the next stage of our development. We see a number of
opportunities for further growth both on our own site and through our third
party partners in the coming months and beyond as we continue to move forward
with our objective to make Sosandar one of the largest womenswear brands
globally."

 

 

 

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 PR Limited (Financial PR)             +44 (0) 20 3405 0205
 Sam Modlin / Matthew Young                 sosandar@almapr.co.uk (mailto:sosandar@almapr.co.uk)

 

This announcement contains inside information for the purposes of the retained
UK version of the EU Market Abuse Regulation (EU) 596/2014 ("UK MAR").

 

 

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 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 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 brand partnerships in place with Next, John
Lewis, Marks & Spencer, The Very Group, JD Williams and J Sainsbury.

 

Sosandar's strategy is to continue growing brand awareness and expand its
customer database, whilst also further driving its high levels of customer
retention. This is achieved through its exceptional products, seamless
customer experience and impactful, lifestyle marketing activities all of which
is underpinned by combining innovation with data analysis.

 

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)

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTGPURCCUPWGRG