As success continues, Sosandar to open stores, go international
It’s rare for trading updates at the moment to be excessively upbeat and to talk of autumn season sales having started well, but one came on Wednesday as Sosandar delivered both an update on trading and on its strategy.
The short story is that the womenswear e-tailer is going to open physical stores from next year, its sales are strong, and it has signed deals to expand in Australia and Canada.
So let’s look at those points, one by one. The fast-growing company’s monitoring of trends has shown there’s “clear evidence of consumers increasingly shopping on the high street coupled with the growing strength of the Sosandar brand”.
Starting next spring, it will open stores and “significantly expand the company’s addressable market into more locations where our loyal customers want to shop”.
It’s targeting “affluent towns with thriving high streets where Sosandar customers over-index”.
The investment in the store opening programme will be self-funded from its existing cash resources.
At the same time, it’s investing in moving away from markdowns and will “significantly reduce price promotions by transitioning customer behaviour to the non-promotional-led proposition it already operates successfully across all its third-party channels”.
The aim is to deliver “significantly higher gross margins, putting the company on a trajectory to deliver pre-tax profit margins of at least 10% in the medium term”.
It spent much of Q2 trialling this and the test has “validated the belief that it can create significant longer-term profit through increased margin and average order value”.
That said, it’s set to take a hit as its trials also showed that traffic and conversion will be lower, “resulting in a short-term revenue reduction, which can be supported from existing cash resources”.
It expects revenue to grow by ’only’ 10% year on year for the current FY24 (which ends next March) to £46.8 million but it should remain in profit during the transition. Revenue in the year ending 31 March 2025 should grow 17% to £54.6 million, “with an upward trajectory in profitability”.
Meanwhile, internationally the business recently launched with the Global-e platform and now fulfils orders worldwide to over 60 countries “in a cost-effective manner”.
Additionally, it has signed deals with The Iconic in Australia and The Bay in Canada that will see it exceeding its previously stated target of launching with one such partner this financial year. These consignment agreements will see it selling a wide range of the Sosandar collection and will launch during H2.
Upbeat autumn
As for the start of the autumn season. Many UK fashion businesses have been devastated by the very warm weather just as cool weather clothing was hitting the rails.
But Sosandar said the season has “started very well”. Net revenue for the week starting 9 October was the highest on record (excluding black Friday) and the highest ever for gross margin.
Sales on the webstore are in line with the results of the Q2 trial, with margin and average order value “significantly increased, and orders and revenue aligned to the company’s expectations of the new reduced promotional plan”.
Sales through third-party partners such as M&SNextVeryJDSainsbury’s
It all means net revenue for the six months to September was up 6% at £22.3 million with the gross margin rising to 55.8% from 54.4%. The loss before tax was £1.3 million, a swing from a profit of £0.1 million. Average order value rose 11% to £99 but conversion was down 19.6% at 3.6%. Traffic
Its product range “has continued to resonate with its customer base with particularly strong sales of summer occasionwear and holiday clothing”. It will now be launching its biggest ever occasionwear range in time for the festive season.
And its mobile app went live in July, exceeding expectations with around 41,000 downloads to date and 20% of sales already being generated through it.
Co-CEOs Ali Hall and Julie Lavington, said of all this: “Our decision to open our own stores is the logical next step as we look to offer our customers more ways to engage and shop with Sosandar.
“We are also delighted to announce our first international third-party partners. Over the last few years, we have demonstrated how successful these types of agreements can be. The first partners we have selected are the perfect fit to launch our international growth.
“The future is very bright as we take the Sosandar brand to more customers across the UK and worldwide.”
