REG - Sosandar PLC - Half Year Results
26/11/2024 07:00
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RNS Number : 5914N Sosandar PLC 26 November 2024
Date: 26 November 2024
On behalf of: Sosandar plc ('Sosandar' or 'the Company')
Embargoed until: 0700hrs
Sosandar plc
Half Year Results
Focus on sustained profitability and transitioning to a true multi-channel
retailer
Sosandar PLC (AIM: SOS), the women's fashion brand, creating quality,
trend-led products for women of all ages, is pleased to announce its financial
results for the six months ended 30 September 2024 and an update on current
trading.
The Company is delighted that it successfully opened its first four physical
stores in the UK during the period, as it continues to further expand its
multiple routes to market. The period under review, once again, reflects the
prioritisation of margin enhancement and profitability with substantial
positive swings in both.
Half Year Financial Highlights
· Revenue of £16.2m (H1 FY24: £22.2m) as the Group continued to transition
away from price promotional activity outside the major scheduled sale events
· Strong gross margin of 62.2%, versus 55.4% in the previous year, reflecting
margin enhancement prioritisation
· £0.7m substantial positive swing to £0.7m pre-tax loss from £1.3m pre-tax
loss in H1 FY24 as a result of margin enhancement and continued careful cost
management
· Robust net cash of £7.0m as at 30 Sept 2024 (£8.3m at 31 March 2024),
reflecting timing of inbound stock for the Autumn/Winter collection and
capital expenditure for roll-out of own stores
Operational and Strategic Highlights
· Successfully opened first four own stores, with strong trading across all
stores, coupled with a demonstrable uplift in traffic to the website in the
areas where the stores are located
· The stores have strong footfall and conversion, and we have seen circa 65% of
purchases in store being made by brand new customers
· Product across all categories continued to resonate with customers with
particularly strong sales of denim, holiday wear and dresses in the Summer
months and partywear and knitwear as we have moved into Autumn
· Trading with well-established third-party partners, including NEXT and Marks
& Spencer, has continued to be strong. Successfully launched in store with
Arnotts in Dublin, Ireland, in September, after initially selling online
through Arnotts' website.
Post-period Trading Highlights (October and November to date)
· Trading in the second half of the financial year has been in line with full
year market expectations*
· Post period, margin and profit continue to show a significant positive swing
versus last year. Average gross margin was 64% (H1 FY25: 62.2%)
· Revenue in October and November is providing further evidence of the
performance that we anticipated as customers become accustomed to paying full
price
· Signed a licensing agreement with NEXT for a Sosandar homeware range following
the success of Sosandar's clothing range sold through NEXT
· Balance sheet remains robust with cash position of £7.0m at 22 November 2024
Ali Hall and Julie Lavington, Co-CEOs commented:
"The past six months have been incredibly important steps in Sosandar's
development. We are now well on our way to becoming a true multichannel
retailer following the opening of our first four stores during the half.
Seeing the Sosandar brand on high streets, and the reaction we have received
so far, validates our decision to give our customers more ways to shop with
our brand. Post period end we signed an agreement with NEXT for our brand to
be licensed to develop a homeware range, providing further validation of the
strength of the Sosandar brand. This shows the leverage and brand equity that
we have built and will allow us to broaden our reach into new audiences and
enable existing customers to deepen their affinity to our brand.
Trading in the second half of the financial year to date has been encouraging,
across all our channels, as we head into peak season. In the lead up to
Christmas we have seen extremely strong sales of occasionwear, knitwear,
including knitted dresses, and denim.
Looking ahead, we remain incredibly excited for what lies ahead for Sosandar
as we take advantage of the multiple opportunities available to us, and we
take the Sosandar brand to more customers across the UK and worldwide and
continue on our journey to become one of the largest womenswear brands
globally."
* Sosandar believes that market expectations for the year ending 31 March 2025
are currently revenue of £40.5 million and profit before tax ("PBT") of £1.0
million.
Presentations
Sosandar is hosting a webinar for retail investors at 13:00 today. If you
would like to attend, please register here:
https://bit.ly/SOS_H1_results_webinar (https://bit.ly/SOS_H1_results_webinar)
The Company is also hosting webinar for analysts at 09:00 tomorrow. If you
would like to register, please contact sosandar@almastrategic.com
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 / Jalini Kalaravy
Alma Strategic Communications +44 (0) 20 3405 0205
Sam Modlin / Rebecca Sanders-Hewett / Kinvara Verdon sosandar@almastrategic.com
About Sosandar plc
Sosandar is a women's fashion brand in the UK targeting style conscious women
who have graduated from lower quality, 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 and tested 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 its own stores, and has a number of high value
brand partnerships including with NEXT and Marks & Spencer.
Sosandar's success has been built on an exceptional product range, seamless
customer experience and impactful, lifestyle marketing, all of which is
underpinned by combining innovation with data analysis. Our growth strategy is
focused on continuing to grow brand awareness and expand our addressable
market and routes to market, reaching customers wherever they wish to shop.
This is achieved both through direct to consumer channels and through chosen
third-party partners.
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)
Co-CEOs' Statement
The first half of FY25 has been a significant period in Sosandar's
development. We opened our first four stores, with one more opening since the
period end, and have seen a demonstrable uplift in traffic to our own site in
the areas where the stores are located.
The period under review, once again, reflects the strategic decision we took
in the second half of last year to reduce price promotional activity outside
the major scheduled sale events and only undertake selective marketing
campaigns, and to focus on driving margin and profitability as we started the
transition to becoming a true multi-channel retailer and commenced our store
rollout.
Whilst revenue has inevitably been impacted, the narrowing of pre-tax losses
during the period and uplift in margin that we are now seeing on a sustained
basis clearly demonstrates that this was the right course of action in order
to drive sustainable profit over the long-term.
We have delivered revenue of £16.2m in the first half which reflects our
continued transition away from price promotional activity outside the major
scheduled sale events.
Our focus on gross margin is delivering, with gross margin for the period
being 62.2%, up from 55.4% in the prior year.
Demonstrating the impact of improved gross margin, we delivered a £0.7m
substantial positive swing in profitability to a £0.7m pre-tax loss from
£1.3m pre-tax loss in H1 FY24. We expect to deliver a further large upwards
swing in profitability in the second half of the year.
We would like to extend our thanks to our team, partners and suppliers for
their unwavering commitment and support of the business.
Our unique product range delivering what women want
The strength of our brand and unique product range remain the key drivers of
our success and keep our customers returning to us for their wardrobe needs.
We create head-to-toe outfits at a mid-level price point that are high
quality, long lasting, with a wide selection of choice that covers all
occasions and unique prints that are designed in-house. We are incredibly
proud to see the success that our Sosandar clothes are having across all our
different routes to market.
Our routes to market
As stated above, our product is what makes Sosandar unique. As a clothing
brand, without an exceptional product the success we have delivered to date
would not have been possible. In order to ensure that our customers can shop
with Sosandar whichever way they wish, becoming a multichannel retailer was a
necessary next step in our development, allowing us to take full advantage of
the £62bn UK clothing market. We can now reach our customers through our own
site Sosandar.com, our app, third-party partners and our own stores.
1) Our own site
Sosandar.com remains the bedrock of the Sosandar hub. It is where our
customers access the complete Sosandar experience including the full extent of
our diverse range. This site is also continually updated with new product and
content.
We are constantly working and investing to ensure that we maintain a seamless
customer experience through this channel. Our own site has always had the
capabilities to operate for a multichannel model, so following the opening of
our own stores we have been able to integrate increased new functionality such
as click and collect and order in store from online.
2) Continued strong trading with third-party partners
Trading with our well-established third-party partners has continued to be
strong, with the success of our product resulting in Sosandar being one of the
top selling brands across all third-party partners including NEXT and M&S
in the UK and The Iconic in Australia.
In September we also launched in store with Arnotts in Dublin, Ireland, after
initially selling online through Arnotts' website. We've seen strong demand
from customers in Ireland via our own website, so this was naturally one of
the next markets for us to move into. Being in store with Arnotts, the oldest
and largest department store in Ireland, is also helping to cement the brand's
presence in the country.
Highlighting the success we have had through our third-party partners, post
period end, we were delighted to announce that we had extended our partnership
with NEXT to licensing the Sosandar brand to develop a homeware range. NEXT is
one of the largest homeware retailers in the UK and the licensing deal will
combine NEXT's sourcing and quality expertise with Sosandar's design
inspiration. The range will include a full set of living room furniture and
accessories, including sofas, accent chairs, rugs and lighting. It will be
sold online exclusively at NEXT.co.uk and expects to launch in Autumn 2025.
This licensing agreement will not require any capital expenditure on our
behalf.
Third-party partnerships, both domestically and internationally, remain a key
facet of our higher margin multi-channel model and we have a strong pipeline
of additional opportunities at various stages of delivery.
3) Our first own stores
We are delighted to have opened our first stores in Marlow, Chelmsford, and
the Metrocentre in Gateshead, and post period end in St David's centre,
Cardiff. These locations were carefully selected for being affluent, thriving
locations where Sosandar customers over-index. We are incredibly proud of
seeing the Sosandar brand on thriving high streets and are delighted with the
reception we have received so far.
We are pleased with the progress of our store portfolio thus far, with sales
tracking in line with our expectations. We have hit the ground running with
strong footfall and conversion, we have seen circa 65% of purchases in store
being made by brand new customers to the brand and have also seen a
demonstrable uplift in traffic to our website in the areas where our stores
are located.
The feedback on our product range and store environment from both new and
existing customers has been fantastic, which shows the power of the Sosandar
brand. Our customers have commented on the great customer service, the feel of
the stores and the way the stores are laid out. We've also seen people start
using stores to click and collect, as well as going into store to order and
try on clothes that they had seen online, creating a seamless interaction
between online and offline, as we had expected.
As a reminder, we believe that having our own stores will:
· Deliver multiple benefits both to our total addressable market,
profitability and to the brand as a whole
· Bring increased brand awareness
· Drive higher margins
· Result in more efficient marketing
· Deliver overall lower returns rates
Current Trading and Outlook
Trading in the second half of the financial year has been in line with full
year market expectations. October and November to date has been strong, across
all channels, with a continuation of a strong gross margin as we head towards
our seasonal peak, and post period revenue in line with last year.
Looking further ahead, we are increasingly informed by our learnings from the
roll-out of our own stores and reduction in price promotional activity. We
continue to focus on margin enhancement as we begin to drive sustainable
profitable growth. Our strategic goal remains to deliver a pre-tax profit of
at least £10m.
We remain incredibly excited for what lies ahead for Sosandar as we take
advantage of the multiple opportunities available to us, and we take the
Sosandar brand to more customers across the UK and worldwide and continue on
our journey to become one of the largest womenswear brands globally.
Financial review
KPIs
6 months ended 30 September 2024 £'000 6 months ended 30 September 2023 £'000 Change
Revenue 16,187 22,163 -27%
Gross Profit 10,066 12,289 -18%
Gross Margin 62.2% 55.4% +680bps
PBT (659) (1,349) +51%
Revenue and PBT
Revenue in H1 FY25 reflected the continued transition away from price
promotional activity outside of the major scheduled sale events, resulting in
a substantial positive swing in the pre-tax loss of £0.7m, to a loss of
£0.7m (H1 FY24: £1.3m). Revenue in the period was £16.2m (H1 FY24:
£22.2m), with the quantum of price promotions on Sosandar.com reducing by 85%
in H1 FY25 compared with the previous year. During each month of the period,
the year on year variance narrowed as the comparatives started to become more
like for like, and importantly customers are becoming increasingly accustomed
to the paying full RRP, as they do when purchasing through our third-party
partners. In terms of revenue through our third-party partners, this has
continued to be strong, in particular through our largest partners NEXT and
Marks & Spencer.
Gross Margin
The Gross Margin in H1 FY25 is 62.2% which increased by 680bps compared to the
same period in the prior year (H1 FY24: 55.4%). The vast majority of this
improvement is due to the reduction in price promotional activity on
Sosandar.com. In addition, there is also some benefit as a result of improved
intake margin including from Sterling strengthening against the Dollar.
Operating Costs
Total Operating Costs decreased by 21% to £10.7m (H1 FY24 £13.6m).
Fulfilment was £1.0m lower which is as a direct result of the strategic
change with regards to price promotions. As each order through Sosandar.com is
at improved gross margin, it also means that the fulfilment operation is more
cost effective as a percentage of revenue, reducing to 11.6% from 12.9% in the
previous year. In addition, we have chosen to do less direct mail brochures in
the period in order to redirect resources to the opening of our first physical
retail stores which, in time, will become the primary marketing vehicle for
the business, with positive results already clear with increased traffic and
revenue being generated on Sosandar.com from the local area to each new store.
In the period, we have incurred £0.2m of store related operating costs
including depreciation in the P&L.
Balance Sheet
Net assets increased to £17.7m at 30 September 2024 compared with £17.2m at
30 September 2023. Cash at 30 September 2024 was £7.0m (30 September 2023
£7.0m).
In the period, £1.0m was invested in CAPEX, with spend across the four UK
physical stores and the Arnotts concession in Dublin, Ireland. The investment
required per UK store has been in line with our expectations, at £250k.
Inventory has reduced to £12.2m (H1 FY24: £14.2m) which reflects the planned
reduction in stock through both the second half of last year and first half of
this year as new styles were complemented by carry over stock to form the
whole range. The lower stock holding also reflects the managed reduction as a
result of lower orders on our own website and the higher margin being
generated. There will be further reductions in stock, although not as
substantial as already reported, which is helping to fund the physical store
openings from existing resources.
Receivables increased marginally to £3.9m (H1 FY24: £3.8m) with the primary
element being amounts owing from our third-party partners. There has been no
change to payment terms with any of our partners in the period and all
partners have continued to pay in full and on time.
Payables decreased to £7.7m (H1 FY24 £9.2m) reflecting the reduction in
stock being purchased for the Autumn / Winter season compared to H1 2024. More
stock has been purchased earlier in the season, for the second year running in
readiness for the first physical retail stores opening and to ensure our new
season ranges launches on time with our third-party partners. As a result,
payments are slightly earlier compared with last year, which results in the
payables balance being reduced.
UNAUDITED CONSOLIDATED STATEMENT OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2024
6 Months to 30 Sept 6 Months to 30 Sept Year ended 31 March
2024 2023 2024
Notes £'000 £'000 £'000
Revenue 16,187 22,163 46,277
Cost of Sales (6,121) (9,874) (19,672)
Gross profit/(loss) 10,066 12,289 26,650
Other operating income - - -
Administrative expenses (10,748) (13,342) (26,984)
Operating profit/(loss) (682) (1,331) (334)
Finance income 62 38
Finance costs (39) (18) (36)
Profit/(loss) before taxation (659) (1,349) (332)
Income tax credit/(expense) - - (91)
Group profit/(loss) for the year (659) (1,349) (423)
Other comprehensive income - - -
Total comprehensive profit/(loss) for the period (659) (1,349) (423)
Earnings/(loss) per share:
Earnings/(loss) per share - basic & diluted, attributable to ordinary 5 (0.27) (0.54) (0.17)
equity holders of the parent (pence)
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2024
As at As at As at
30 Sept
30 Sept
31 March
2024 2023 2024
Notes £'000 £'000 £'000
Assets
Non-current assets
Intangible assets 459 367 391
Property, plant, equipment 1,201 339 407
Right of Use asset 2,093 592 584
Deferred income tax asset 605 696 605
Total non-current assets 4,358 1,994 1,905
Current assets
Inventories 12,165 14,216 10,920
Trade and other receivables 3,864 3,798 2,768
Cash and cash equivalents 6,951 6,981 8,313
Total current assets 22,980 24,996 22,001
Total assets 27,338 26,989 23,906
Equity and liabilities
Equity
Share capital 4 248 248 248
Share premium 4 52,619 52,619 52,619
Capital Reserves 4,648 4,648 4,648
Other reserves 1,617 1,360 1,485
Reverse acquisition reserve (19,596) (19,596) (19,596)
Retained earnings (21,855) (22,126) (21,196)
Total equity 17,681 17,157 18,208
Current liabilities
Trade and other payables 7,675 9,198 5,076
Lease liability 294 111 197
Total current liabilities 7,969 9,309 5,270
Non-current liabilities
Lease liability 1,688 523 428
Total non-current liabilities 1,688 523 428
Total liabilities 9,657 9,832 5,698
Total equity and liabilities 27,338 26,989 23,906
UNAUDITED CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE 6 MONTH PERIOD ENDED 30 SEPTEMBER 2024
6 Months 6 Months Year ended
to 30 Sept
to 30 Sept
31 March
2024 2023 2024
Notes £'000 £'000 £'000
Cash flows from operating activities
Group profit/(loss) before tax (659) (1,349) (332)
Share based payments 132 137 262
Depreciation and amortisation 266 141 316
Finance costs 39 18 36
Finance income (62) (38)
Working capital adjustments:
Change in inventories (1,245) (1,855) 1,441
Change in trade and other receivables (1,096) (1,068) (38)
Change in trade and other payables 2,559 843 (3,279)
Net cash flow from operating activities (66) (3,133) (1,552)
Cash flow from investing activities
Addition of property, plant and equipment (1,045) (30) (81)
Addition of intangibles (114) (324) (458)
Initial direct costs on right of use asset - - -
Interest paid - - -
Net cash flow from investing activities (1,159) (354) (539)
Cash flow from financing activities
Net proceeds from issue of equity instruments 4 - - -
Lease payment (199) (107) (210)
Finance income 62 38
Net cash flow from financing activities (137) (107) (172)
Net change in cash and cash equivalents (1,362) (3,594) 2,263
Cash and cash equivalents at beginning of period 8,313 10,576 10,576
Cash and cash equivalents at end of period 6,951 6,982 8,313
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE 6 MONTH PERIOD ENDED 30 SEPTEMBER 2024
Share capital Share premium Reverse acquisition reserve Capital redemption reserve Retained earnings Other reserves Total
Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 30 September 2023 248 52,619 (19,596) 4,648 (22,122) 1,360 17,157
Profit (Loss) for the period - - - - 926 - 922
Share-based payments - - - - - 125 129
Issue of share capital 4 - - - - - - -
Costs on issue of share capital 4 - - - - - - -
Balance at 31 March 2024 248 52,619 (19,596) 4,648 (21,196) 1,485 18,208
Profit (Loss) for the period - - - - (659) - (659)
Share-based payments - - - - - 132 132
Issue of share capital 4 - - - - - - -
Costs on issue of share capital 4 - - - - - - -
Balance at 30 September 2024 248 52,619 (19,596) 4,648 (21,855) 1,617 17,681
Share capital is the amount subscribed for shares at nominal value.
Share premium represents the excess of the amount subscribed for share capital
over the nominal value of those shares net of share issue expenses.
Share based payments reserve relate to the charge for share-based payments in
accordance with International Financial Reporting Standard 2.
Retained earnings represent the cumulative loss of the Group attributable to
equity shareholders.
Reverse acquisition reserve relates to the effect on equity of the reverse
acquisition of Thread 35 Limited.
Capital redemption reserve represents the aggregate nominal value of all the
deferred shares repurchased and cancelled by the Company. The reserve is
non-distributable.
NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION
1. General Information
Sosandar Plc is a company incorporated and domiciled in England and Wales. The
Company's offices are in Wilmslow. The Company is listed on the AIM market of
the London Stock Exchange (ticker: SOS).
The financial information set out in this Half Yearly report does not
constitute statutory accounts as defined in Section 434 of the Companies Act
2006. The Company's statutory financial statements for the year ended 31 March
2023, prepared under International Financial Reporting Standards ("IFRS"),
have been filed with the Registrar of Companies. The auditor's report on those
financial statements was unqualified and did not contain statements under
Sections 498(2) and 498 (3) of the Companies Act 2006.
Copies of the annual statutory accounts and the Half Yearly
report can be found on the Company's website at
http://www.sosandar-ir.com/content/investors/annual-reports.asp
(http://www.sosandar-ir.com/content/investors/annual-reports.asp) .
2. Basis of preparation and significant accounting policies
This Half Yearly report has been prepared using the historical cost
convention, on a going concern basis and in accordance with "IFRS" as adopted
by the European Union, using accounting policies which are consistent with
those set out in the financial statements for the year ended 31 March 2024.
3. Segmental reporting
The directors have considered the requirement of IFRS 15 with regards to
disaggregation of revenue and do not consider this to be required as the group
only has one operating segment which is retail sales.
The income recognition for delivery receipts, commissions on partner-fulfilled
sales and wholesale revenue are in line with that of retail sales and linked
to dispatch/delivery to customers.
Due to the nature of its activities, the group is not reliant on any
individual major customers.
During the prior year, the Group expanded into international markets. The
major geographical market remains the UK.
Period ended Year ended
30-Sept 30-Sept
2024 2023
£'000 £'000
UK 16,015 22,163
Rest of World 172 -
Total 16,187 22,163
4. Share capital and reserves
Details of ordinary shares issued are in the table below:
Ordinary Shares (£0.01)
Date Number of shares Issue Price £ Total Share Capital £'000 Total Share Premium £'000
At 31 Mar 2023 248,226,513 0.001 248 52,619
Shares issued: - - - -
At 31 Mar 2024 248,226,513 0.001 248 52,619
Shares issued: - - -
At 30 September 2024 248,226,513 0.001 248 52,619
5. Earnings per share: profit / (loss)
Basic loss per share is calculated by dividing the loss attributable to equity
shareholders by the weighted average number of ordinary shares in issue during
the period:
6 Months to 30 Sept 2024 6 Months to 30 Sept 2023 Year Ended 31 March 2024
(Loss) / Profit after tax attributable to equity holders of the parent (659) (1,349) (423)
(£'000)
Weighted average number of ordinary shares in issue 248,226,513 248,226,513 248,226,513
Basic / Diluted earnings / (loss) per share (pence) (0.27) (0.54) (0.17)
6. Post balance sheet events
The Company had no post balance sheet events.
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