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Highlights
- Sosandar achieved a gross margin of 62.2% in H1 2024, up from 55.4%, through careful cost management and reduced promotional activity.
- The company successfully launched its first three physical stores, with strong trading results, and plans to open a fourth in Cardiff soon.
- Sosandar has moderated its FY25 revenue expectations to £40 million, but profit expectations remain unchanged due to margin strength and continued focus on cost efficiency.
Sosandar plc (LSE:SOS), the women’s fashion brand known for its quality, trend-driven designs, has provided a trading update for the six-month period ended 30 September 2024. The update highlights Sosandar's focus on margin enhancement, successful store openings, and a positive outlook for long-term growth.
Performance Highlights
During the first half of 2024, Sosandar achieved several key milestones, reflecting a strategic focus on improving profitability:
- Revenue: The company reported revenues of £16.2 million, down from £22.2 million in the prior year. This decrease is attributed to the Group's decision to move away from price-promotional activities outside of major sale events.
- Gross Margin: Sosandar's gross margin rose to 62.2%, a significant improvement compared to 55.4% in H1 FY24. This margin growth reflects the company's focus on enhancing profitability and controlling costs.
- Pre-tax Loss: The Group reported a pre-tax loss of £0.7 million, a considerable improvement from a £1.3 million loss in H1 FY24, demonstrating the impact of margin improvement and careful cost management.
- Net Cash Position: Sosandar maintains a robust net cash balance of £7 million, reflecting investments in inventory for the Autumn/Winter collection and capital expenditures related to its new physical stores. This figure is slightly lower than the £8.3 million recorded in March 2024.
Expansion into Physical Retail
A major highlight for Sosandar in this period has been the successful launch of its first three physical stores in the UK, located in Marlow, Chelmsford, and the Metrocentre in Gateshead. The company has also announced the upcoming opening of a fourth store in the St David’s Centre in Cardiff.
The choice of affluent and thriving locations has proven beneficial, with all three stores performing strongly. Additionally, the company has seen a notable increase in website traffic from the regions where the stores are located, underscoring the effectiveness of its multi-channel approach. The store expansion is expected to drive Sosandar's long-term growth by capturing a portion of the £60 billion UK clothing market transacted in physical stores.
Strategic Partnerships
Sosandar continues to strengthen its brand through strong third-party partnerships. In the UK, the company’s collaborations with Next and Marks & Spencer have been fruitful, while its partnership with The Iconic in Australia has also seen positive early results. Additionally, the brand has made inroads into the Irish market, launching a store presence with Arnotts in Dublin, after initially selling online through the department store’s website. This has helped cement Sosandar’s brand presence in Ireland, where demand remains strong.
Current Trading and FY25 Outlook
Trading in October has started well across all channels, with revenues tracking ahead of last year. Sosandar attributes this improvement to its focus on margin enhancement and the shift away from price promotions. As the company moves into its seasonal peak, it expects strong performance to continue, particularly with gross margins remaining on an upward trajectory.
Given the solid performance to date, Sosandar has moderated its FY25 revenue expectation to £40 million, but it expects pre-tax profit targets to remain unchanged due to the strong margins and careful cost management. The company’s longer-term goal remains to achieve £100 million in revenues and at least £10 million in pre-tax profit.
