Online women’s fashion brand Sosandar (SOS:AIM) bucked the retail sector doom and gloom this Christmas, with an acceleration in sales through the festive quarter triggering top line upgrades.
Full year revenue is on track to top current market expectations and management is confident of delivering further growth in future years, although the shares cheapened 0.25p to 28p on news this year’s loss will be wider than forecast as Sosandar steps up investment to acquire new customers.
A CHRISTMAS CRACKER
The web-based womenswear lifestyle brand reported a stunning 136% surge in revenues to £3.8m for the third quarter to 31 December 2019, significantly exceeding the £2.8m of sales generated in the first half of the financial year.
During a record quarter, revenues in each month topped £1.2m thanks to product range expansion and a major boost from increased investment in TV advertising.
Sosandar said the ‘very strong’ momentum witnessed in autumn has continued into the winter selling season, with demand boosted by cold weather which is driving higher price product sales.
Encouragingly, Sosandar said positive momentum has continued into the New Year with January ‘tracking up over 160%’ and repeat orders in this traditionally testing month for the rag trade exceeding those generated in the successful Autumn/Winter period.
RARE RETAIL BRIGHT SPOT
‘In our view, Sosandar is top of the tree this Christmas and, despite its lower sales base, outperformed all other UK clothing retailers including Boohoo (BOO:AIM), Next (NXT), Marks & Spencer (MKS) and Quiz (QUIZ:AIM),’ thundered Shore Capital.
The house broker also pointed out that Sosandar’s marketing campaigns, including selective regional TV advertising slots, are ‘resonating extremely well’ and ‘acquiring new subscribers’, and insisted Sosandar remains on track to reach breakeven in the year to March 2021.
CONNECTING WITH CONSUMERS
Repeat orders in the ‘golden quarter’ rocketed 140% higher on the same period in 2018 to 51,320, supported by a 93% year-on-year increase in the active customer database to more than 110,000.
While Sosandar is a small-but-ambitious upstart in an ultra-competitive market, Shore Capital assured this growth in repeat orders shows the brand is ‘connecting with consumers, which will lead to improved profitability over time’.
For the current year to March 2020, Shore Capital upgraded its revenue number by 6% to £10.1m, reflecting the acceleration in third quarter trading that has continued into January, although its operating loss estimate widened to £5.4m to reflect increased marketing costs.
The broker also upgraded its 2021 sales estimate from £19.9m to £20.9m, although its operating profit forecast was reduced from £1.4m to £400,000.
READ MORE ABOUT SOSANDAR HERE
Sosandar’s joint chief executives Ali Hall and Julie Lavington, who previously launched and ran fashion magazine Look as editor and publishing director respectively, enthused that ‘the opportunity we identified appears to be bigger that we first thought, with the success of new product areas helping to drive repeat purchases increasing the potential for future ranges.
‘This has been enhanced by the successful trial in TV advertising which, combined with the already established channels of social, direct mail and PR, expands our ability to attract more new customers than originally anticipated.’
