Sosandar PLC (AIM: SOS), the online women's fashion brand, is delighted to announce the following trading update for the three months ended 31 December 2019.
The Company's very strong trading performance in autumn has continued into winter with the Company delivering a record quarter during which net revenues in each month exceeded £1.2 million. Revenue for the period was above management's expectations at £3.8m, a 136% increase on the same period in 2018 and significantly exceeding the revenue generated for the entire first half of the financial year (£2.8m). This was driven through product range expansion and increased TV investment after the successful September trial. The performance of TV was especially pleasing given this is a peak period where competition is high and cut through can be difficult.
Following the increased investment in customer acquisition as previously announced, the Company has seen a substantial growth in its active customer database which now stands at over 110,000, an increase of 93% on the same period in the prior year, and 47% up on 31 September 2019. Repeat orders in the quarter increased 140% on the same period in 2018 to 51,320, demonstrating that once customers engage with Sosandar's product range and unique design aesthetics they remain loyal to, and highly engaged with, the brand.
Highlights for the three months ended 31 December 2019 vs same period 2018
· Strong revenue growth achieved following the increased investment made into marketing, product and team
· Enhanced design capability and broadened product range helping to ensure new and existing customers remain loyal to Sosandar:
o Customer database increased 109% to 207,672
o Active customer database increased 93% to 110,132
o Average order value at £101.97, an increase on H1, reflecting cold weather driving sales of higher price point items as expected
o Repeat orders increased 140% to 51,320
o Conversion rate of 2.72%, a strong result given the level of traffic generated from TV advertising
· Number of orders increased 140% to 84,304
· Gross margin for the quarter, including the seasonal sale period and higher than forecast acquisition with first order discount, was 52%
· Returns remained stable at 49%, reflecting the different product mix in Autumn/Winter
· Net cash of £4.2m and stock increased from £1.9m at 30 September 2019 to £3.5m at 31 December 2019 reflecting increased stock landing pre-Christmas for post-period selling
The increasing data in the business shows that its customers' tendency to repeat order is driving strong growth in lifetime revenues. Sosandar's product is designed to suit women of all ages, therefore this growth is expected to continue as they remain engaged with the brand across many years.
Sosandar saw steady progress in performance month-on-month, with October revenues up 108%, November up 138% and December up 153% year on year. This momentum has continued post-period, with January tracking up over 160%, and pleasingly repeat order performance is exceeding that in the highly successful Autumn/Winter period.
Given the strong current trading, the Company's full year revenue is on track to exceed current market expectations and the Company is confident in delivering further growth in future years thanks to the escalated customer acquisition between September and December. The success of the Autumn/Winter period and increase in repeat orders and lifetime revenues of customers means the Company intends to carry on with its increased investment strategy in Q4 to drive current and future growth. Given the upfront cost of acquiring new customers against the benefit over the lifetime of the customer, the Company expects this investment to result in the net loss for the full year being higher than previously anticipated with the increased benefit to be experienced in future years.
Ali Hall and Julie Lavington, Joint CEOs, commented:
"We are delighted to be reporting on an exceptional period of growth with sustained momentum across the key trading months to 31 December. It is pleasing that, as expected, following our increased investment in marketing, product and team we are seeing accelerated growth across all our KPIs. It is also testament to the quality of our product range that once we have acquired the customers they are becoming highly engaged with our brand.
"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.
"Acquisition of customers is nothing without successful retention and that's why it is so pleasing to see that repeat customers in January, a traditionally difficult trading period, are tracking higher than in the peak Autumn/Winter period helping to continually improve the ever-growing lifetime revenue number."