Shares in online women’s fashion brand Sosandar (SOS:AIM) soared 23.4% higher to 19.75p as a sparkling first half trading update confirmed head turning top line momentum.
Sosandar, whose celebrity fans include Spice Girl Mel B and TV personalities Amanda Holden and Kelly Brook, said revenues topped £1m in a month for the first time in October as accelerated marketing spend boosted brand awareness, although house broker Shore Capital (SGR:AIM) has increased this year’s forecast loss with Sosandar investing to bag market share.
FIRMLY IN FASHION
During the six months to September, revenues at Sosandar, run by joint CEOs Ali Hall and Julie Lavington (pictured below), the founders who previously ran fashion and celebrity style magazine Look, rose 53% to £2.82m.
Second quarter sales grew 84% with sales more than doubling in both September and October.
Back in July, AIM-listed Sosandar raised £7m through an oversubscribed placing priced at 15p and has been using the funds to strengthen its design capability, widen the product range and invest in marketing.
Sosandar is a small-but-ambitious upstart in an ultra-competitive market, so it is reassuring to see investment in new marketing initiatives driving significantly increased recognition of the brand.
RECORD SEPTEMBER SIGN-UPS
In September, the first month its TV adverts went live, Sosandar enjoyed a record number of email subscriber sign-ups with a 224% increased on August. Little wonder then that the ambitious womenswear retailer is investing further in TV advertising to accelerate growth.
READ MORE ABOUT SOSANDAR HERE
Over the course of the first half, customers began to place repeat orders more frequently, while the returns rate, the bane of an online retailer’s existence, reduced to 49% from 52% in the prior year, demonstrating ‘the appeal of the company’s unique design aesthetic and customers’ growing loyalty to the Sosandar brand’ according to Lavington and Hall.
BREAKEVEN IN SIGHT
‘Purely to reflect the increased marketing spend and staffing costs, we increase our operating loss in full year 2020 but the company remains firmly on track to reach breakeven in full year 2021,’ insisted Shore Capital.
For the year to next March, the broker forecasts a widening of pre-tax losses from £3.6m to £3.8m on turnover more than doubled to £9.5m, ahead of maiden pre-tax profits of £1.4m on £19.9m sales in 2021.
Perhaps unsurprisingly, Shore Capital insists there is ‘significant upside to the current share price’, while highlighting a fair value of 50p for the stock.
‘The new marketing channels and additional product ranges (with more to come in the Spring) is being reflected in the current trading performance of the company in the autumn with record months in both September and October.
Despite additional costs in the short term we believe that this is right strategy for the company and there is no change to our revenue forecast or timeframe to reach profitability in full year 2021.’
