Sosandar loss widens but new year starts with a bang
Online womenswear retailer Sosandar remained loss-making in its latest year, but the company continues to make progress and said that the new financial year has got off to a strong start.
The company is “delighted with trading at the start of its current financial year”. In Q1 (April to June), the business increased year-on-year revenue by 54% while reducing operating costs by 71% to help drive “a 69% improvement in its loss position”.
And the strong performance has continued since then with revenue up 57% during July, a margin of 55.5% and operating costs reduced 84% year-on-year. It's also seen an 83% improvement in its net loss position.
It's also interesting that the company has echoed what Asos said this month in terms of a lower level of returns during and since the lockdown. It said that year to date, returns of only 38% beat 50% in the prior year.
This was “driven partly by product mix, but also by a shift in customer behaviour across all product categories. Even as returns begin to normalise again, we are seeing returns well below last year's levels”.
The strength in current trading underpins its confidence in “carefully increasing marketing activity at the end of Q2 in order to enhance customer acquisition activity”. The customer base has actually risen 8% since the year-end even while it reduced its average monthly marketing spend by 85%, so the potential as it increases that spend is clearly large.
And it has signed contracts with John Lewis and Next to launch on their website platforms in Q2, putting its products in front of a massive number of consumers who might not have heard of it before.
As for the last financial year (FY20, the 12 months to March 31), the company saw revenue growth of 103% to reach £9.03 million. The gross margin was down to 48.5% from 55.5% due to an “intense period of customer acquisition with first order customer promotions alongside actions to address the impact of Covid-19 in the final month of the year”.
It made an EBITDA loss of £7.66m and a net loss of £7.8 million, wider than the £3.54 million loss of a year earlier, due to investment in the team, supply chain and marketing.
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