Wilmslow-based online women’s fashion brand, Sosandar, reported an increase in annual revenues, but the pre-tax loss was marginally more than forecast.
The business, founded by co-CEOs Ali Hall and Julie Lavington, achieved total sales of £46.277m for the year ended March 31,2024, against £42.451m the previous year, while a pre-tax loss of £332,000 was compared with a pre-tax profit of £1.597m.
In an April trading update this year, Sosandar forecast turnover of £46.8m and a £200,000 pre-tax loss, following a profitable second half.
The company is currently transitioning from a wholly online operation to becoming a multi-channel retailer, through the planned opening of its own stores.
It said it achieved an improved gross margin of 57.6%, compared with 56.2% the previous year, as well as strong cash generation in the second half of the financial year, resulting in an improved net cash position of £8.3m as at March 31, 2024, up from £7.7m a year ago.
In the first quarter of the current 2025 fiscal year, the business said it continued to focus on prioritising margin enhancement and profitability. It made an 80% reduction in price promotional activity on Sosandar.com versus the same quarter last year and a 670bps improvement in gross margin to 63.4%.
It hailed a “substantial positive swing” from an £800,000 pre-tax loss in Q1 FY24 to a £200,000 pre-tax loss in Q1 FY25.
Net revenue of £8.2m, against £11.4m a year ago, reflects prioritisation of increasing gross margins to improve profitability, it said.
The balance sheet remains robust with the cash position remaining flat at £8.3m as at June 30, 2024, versus March 31, 2024, allowing the business to self-fund the planned store roll-out.
Sosandar said its product continues to resonate with customers, with partywear, dresses, tailoring, knitwear and denim being standout items.
Trading with well-established third-party partners has continued to be strong, and it has built on strong existing capabilities with the hiring of a Head of Retail and Head of Retail Operations.
Post-reporting period, the company has signed for its first two stores, located in Marlow and Chelmsford.
It said these locations were highly sought after given both stores fit its criteria of being positioned in top tier locations, located in the right position in affluent locations and are where Sosandar customers over-index.
Both shops are expected to open in September, while other prospective stores are at a late stage of negotiation with a broader set of store locations identified for roll-out over the medium term.
Today’s anouncement said: “Whilst it is early in the year to predict a full year outturn, we have taken the decision not to drive revenue growth at the detriment of margins in FY25. The 670bps increase in gross margin to 63.4% means pre-tax profit levels are expected to remain in-line with expectations, despite lower revenues, which are now likely to be in-line with the prior year.”
Current market expectations for 2025 are revenue of £54.6m and profit before tax of £1m.
“Looking further ahead, we expect that our enhanced brand presence and sales mix will, once again, deliver revenue growth in the years ahead, driven by growth through our own website, the roll-out of stores and the compounding positive effect that the shops will have across all of our channels.”
Ali Hall and Julie Lavington said: “We have delivered a robust financial performance for FY24, delivering a profitable second half, accelerating revenue growth whilst at the same time growing our margin and generating cash.
“This performance has been achieved against one of the most challenging backdrops our industry has experienced and is a testament to how our customers feel about our on-trend, affordable, long lasting, lifestyle appropriate clothes.
“The transition to becoming a true multi-channel retailer, with our products being sold on our own site, our mobile app, through our own stores and via highly reputable third-party partners, is well under way. To meet our strategic goal of delivering a pre-tax profit margin of at least 10% in the medium term and £100m+ revenues, we have refined our focus and built a roadmap that will shape our decision making over the coming years.”
They added: “The core ingredients to this include prioritising margin and sustainable profitable growth rather than revenue growth through promotional activity. In doing so, we will leverage our brand equity, creating our own marketing ecosystem through our stores which will enable us to own our customers directly.
“We are excited to announce the first locations for our Sosandar stores. These stores fit our criteria of being positioned in top tier locations, located in the right position in affluent, thriving locations where Sosandar customers over-index. Throughout the process we have remained disciplined in our approach to ensuring ‘right price, right location’. We look forward to the official opening of them over the next few months, and with others to come.
“Looking ahead, FY25 is focused primarily on delivering sustainable growth in our gross margin, pre-tax profit, cash generation and maintaining a strong balance sheet. Nonetheless, we do expect revenue growth from on our own site, further third party partnerships, opening shops and the compounding positive effect that the shops will have across all our channels.
“We believe that the future is very bright as we take the Sosandar brand to more customers across the UK and worldwide, as we move forward towards reaching our strategic goal in the medium term.”