Sosandar sales surge, raises £3m to support growth plans
Sosandar had plenty to talk about on Wednesday as the contemporary online women's fashion brand released a trading update and also had news of a £3 million share placing.
For the six months to September 30, it said revenue has risen 407% year-on-year to reach £1.84 million and that sales momentum continued throughout the summer.
Importantly too, it continued into the start of the autumn with “record monthly revenues in September.” That's good news in a market that's extremely challenged at the moment and especially as the firm said sales have been strong across all product categories, including higher-value items such as coats and leather.
And Sosandar isn't only attributing it success to its product offer. On Wednesday it said its growth “reflects the increasing efficiency of the company's customer acquisition activities across multiple channels.” It added that its content-driven marketing strategy “has been further enhanced by a diverse and growing celebrity and social influencer fanbase” that “directly impacts sales but also increases brand appeal and awareness as shown by Facebook and Instagram followings, which have grown over the year by 129% and 193% respectively.”
Investment in data analysis has “underpinned the ability to provide better targeting and more personalised engagement with customers, ultimately leading to more effective use of marketing spend and efficiencies in customer acquisition. This is illustrated by the number of new customers increasing 362% during the period, ahead of management's expectations.”
There was little talk about profits, although it's undeniable that such an early stage company wouldn't expect to be banking large profits.
So focusing on the good news around sales, the company said that continuing the positive trend, over the last six months “customers have been repeat ordering more frequently and with a higher basket size.”
Gross margin for the period is expected to be 55% (46% H1 2017), “a significant improvement on the prior period achieved through higher levels of stock sold at full price, a very low level of discounting taking place during the summer months and improvement in the company's buying power as scale and repeat business builds.”
One downside is that the firm also said returns levels have increased during the period. This is partly because of “higher than anticipated levels of customer acquisition, as new customers find their correct fit,” and a particularly high demand for dresses during spring/summer. Dresses have higher return rates due to a more complex body fit and management expects returns to be lower at the full year, reflecting the different product mix in autumn/winter.
Joint CEOs Ali Hall and Julie Lavington said of all this: “The business has made substantial progress over the first six months of the year, and we are delighted to have delivered such strong growth in revenues, orders and new customers. Pleasingly, this has been accompanied by a growing number of repeat customers and an increased average order value, as those customers already recruited become brand ambassadors. Our clothes have become a mainstay in our customers' wardrobes - including celebrities - and we are proud that our garments are being worn by high profile actresses, TV presenters, sports stars and social media influencers.”
And they also announced that the company has raised £3 million through a placing arranged by Shore Capital. The net proceeds of the placing will be used to support the ongoing growth plans for the business and the execution of its stated strategy.
The two CEOs said that they saw “strong institutional investor interest in the company [with] the placing price at a very significant premium to our IPO in November 2017 which we believe reflects the significant ongoing progress of the company and its future prospects.”
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