Sosandar powers ahead although investment means losses widen
Contemporary online women's fashion brand Sosandar has reported a massive revenue surge in the year ending March 31 with a 387% increase, although the early-stage company is likely to turn in a number of such surges as it builds its business from a very small starting point.
In the latest year its revenue rose from £280,000 to reach £1.35 million and like-for-like sales in the six months up to March soared 268%.
Meanwhile gross profit also powered ahead fast, although again, the triple-digit rise was largely due to the fact that profit had been very low in the previous year. This time, gross profit was £660,000, up from £100,000 a year ago.
While the company’s start-up status is responsible for those massive percentages, it's undeniable that Sosandar is making impressive progress and importantly, its gross margin improved 11.6 percentage points to 49.4% from 37.8%.
But it wasn't 100% good news as it saw pre-tax losses of £6.06 million, which included £2.9 million of one off costs and accounting adjustments linked to its recent reverse takeover and AIM listing. It made an underlying EBITDA loss of £3.16 million compared to a £1.82 million loss a year before, “reflecting the increased investment in customer acquisition, product imagery and people to deliver growth.”
Back with the good news, the company, which had a year-end cash balance of £4.6 million, increased its product range by over seven times during the year and saw order growth of 353% to 31,732 orders. Its customer database also grew by 695% to 54,196 and it grew its Facebook and Instagram followings over 2.5 times and nine times respectively. And its conversion rate increased by 87bps to 2.16%.
Importantly too, its average order value rose 8% over the year, sitting at just over £94 by March 31 compared to just over £87 a year earlier.
Co-CEOs Ali Hall and Julie Lavington said in the company's results release: “We are very pleased to be reporting on a year of very strong financial and operational progress. Our increased scale, partially facilitated by our listing on AIM in November 2017, has supported us in making a greater variety of products, more frequently, and in buying significantly higher levels of stock.
“A key focus for the team has been building awareness of the brand and customer acquisition, and we are proud to report that through implementing a strategic campaign across a multitude of channels we have been able to substantially grow our customer database. Our 'test and repeat' model has delivered well. We've also seen a growing conversion rate and average order value.”
They also said that the momentum reported in March has continued into the new financial year, surpassing the March performance. In the quarter to June 18, revenue was up 73% vs the quarter to March 18. “This has been achieved while also driving cost efficiencies, especially with respect to acquiring new customers,” the company said. In fact, the cost of acquiring new customers is down 14% in the same period, while the number of new customers acquired has actually increased by 97%.
The strategy now is to continue to broaden the product range, to “buy deeper and engage in a more diversified marketing strategy.” Sosandar also remains “focused on data-driven efficiencies and digital investment to improve our customers' journeys” and believes the results to-date “demonstrate the considerable potential and opportunity in this under-served market.”
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