Sosandar has strong Q4 but coronavirus starts to bite
In an unscheduled update on Wednesday, Sosandar reported Q4-to-date revenue up 203% following strong trading in January, February and early March. But it added that times are starting to get tougher.
“The recent increasing macro-economic uncertainty associated with the COVID-19 outbreak is creating a significantly more challenging and volatile trading environment,” it said. “As a result, sales over the past week have been substantially weaker than expected with margins also being impacted by increased customer incentives used”.
It expects the trend to continue in the immediate future and so the company's performance in March “will be well below forecast”. As a result, for the year ending March 31, it expects its revenue to be between £9 million and £9.3 million and the net loss for the year to be between £6.5 million and £6.8 million.
However, it’s staying upbeat. The firm said that its “prior performance this year and continued customer engagement statistics showed there is a clear demand for the company's unique offering in the market”.
But it’s still focusing on “cash preservation” for now and “will therefore substantially reduce its planned marketing spend in order to focus on repeat orders from the group's existing customer base rather than new customer acquisition in the short-to-medium term”.
It has “a robust balance sheet and expects to end the year with cash in excess of £5 million and healthy stock levels to support the business during this unprecedented time”.
The company also said it’s not seeing any significant disruption to its manufacturing. “Having a flexible supply base, Sosandar is able to resource raw materials and production from other geographies when necessary to ensure a minimal disruption to the supply chain,” it added.
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