Online fashion retailer Sosandar (LON: SOS) reported slower growth in the first half, but there are signs that momentum is rebuilding in the second half. The share price recovered 3.15% to 14.75p, which is well below the February placing and retail offer price of 22p.
AIM-quoted Sosandar increased its interim revenues by 6%, but it swung from a pre-tax profit of £77,000 to a loss of £1.35m as it gears up for further growth. Gross margin edged up due to a reduction in price promotions activity, but overheads increased due to higher commissions to partners. This reflects higher sales through Next and other high street retailers.
There was £7m in the bank at the end of September 2023, even though inventories were increased. This is enough to finance the expansion plans.
Sosandar is broadening its strategy to include its first high street shops, plus expansion in additional regions. The sales via other retailers have made management believe that it is the right time to move into the high street. There is no indication where the stores will be, but the first should open in the spring.
Deals have been signed with The Bay in Canada and The Iconic in Australia, which will sell Sosandar clothing online before the end of March 2024. Sainsbury’s fashion concept stores launched in October with a range of Sosandar’s products.
In October and November revenues were £10.2m, which is a 16% increase on the same period last year, and gross margin continues to improve. Singer is sticking to its full year forecast of revenues of £46.8m and a £100,000 profit, which could increase to £1m next year.
The strategy is to achieve £100m in revenues and £10m in pre-tax profit in the medium-term, helped by higher store margins.