More bad news for In The Style as losses grow, outlook weak

By

Nigel TAYLOR

Published
Jan 23, 2023

Under-pressure digital womenswear fashion brand In The Style (ITS) continues to struggle with losses expected to grow and its future still under review.

That comes after the retailer described trading for the three months to 31 December as “challenging” despite signs of an encouraging performance in November and during Black Friday.

ITS said the results “reflected high levels of markdown activity across the market, disruption to delivery services and the impact of cost-of-living pressures on our customers”.

Total revenue for the quarter fell 22% on a year ago, with direct-to-consumer revenue down 13%. Gross margin for the quarter was “lower than our expectations”, but it pointed out this was “broadly in-line with several of the group's peers”.

Stock exchange-listed In The Style said it had managed inventory levels well through the peak trading months and closed the quarter with stock of £3.2 million compared to £3.6 million a year ago.

Cash at the end of December was £3.2 million with the group's invoice discounting facility — which would provide an additional £0.4 million of liquidity — remaining undrawn.

Earlier, it reported revenue of £57.3 million for the 12 months to end-March 2022, up from £33.7 million, and pre-tax losses of £1.5 million compared to a profit of £125,000 in the prior year.

Turning to its all-important outlook, ITS said it expects revenue for the full year to be in the region of £46 million “reflecting market-wide cost-of-living pressures on consumer demand, higher levels of markdowns and a reduction in wholesale demand”.

That means with lower than anticipated revenue and gross margins, the group will report an adjusted EBITDA loss of between £4.25 million and £4.75 million for the year.

It said an ongoing strategic review of the business, announced on 8 December, “may or may not result in a sale of the company or some or all of the group's business or assets” with a further update to be made in due course.

Adam Frisby, interim CEO, said: “Despite… challenges, we are encouraged by the positive customer reaction to FITS, our own brand range, which provides an exciting opportunity for us to further leverage the strengths of our influencer collaboration model.

“We are firmly focused on launching exciting, unique and inclusive new collections for our customers in collaboration with our influencer partners as well as tightly managing stock, costs, and cash. I remain absolutely confident in the fundamental strengths of the In The Style brand as well as our differentiated model.”