Koovs confident for 2020 despite prior year sales drop

Indian fashion retailer Koovs has predicted “significant” growth for its 2020 financial year after a strong showing in the first quarter.

The Aim-listed business, which is chaired by Labour peer and former Asos chair Lord Waheed Alli, said the gross order value in the first three months of the year rose 104% year-on-year to £4.82m, extending the recovery witnessed at the end of the prior financial year.

The first-quarter trading margin increased to 21%, while web traffic rose 148% to 26.35m. The conversion rate was 1.3%.

Alli said the online retailer, which has endured a bumpy couple of years, was “firmly back on track”. He added: “We’re excited about the rest of the year, as we continue to invest in both marketing and our product range.”

Looking ahead, chief executive Mary Turner said: “We expect to return to significant full-year growth in 2020, with a focus on securing a continued improvement in trading margins.

“The recent funding secured from FLFL will fuel our ability to continue to invest in marketing, to increase traffic levels, together with an expansion in our product offering, designed to left conversion rates.”

In May, Koovs announced that Future Lifestyle Fashion (FLFL) – which is part of India’s largest retail company, Future Group – will invest £10.5m in the business.

In the full year to 31 March, revenues were flat at £6.4m, GOV was £12.8m compared to £14.8m a year earlier and net sales declined 21% to £7.5m. The conversion rate was 1.1%.

The adjusted EBITDA loss narrowed to £12.9m from £13.9, while losses per share were 5.3p, compared to 2018’s loss of 8.3p. The group raised new funds of £22m before costs of £1m during the year.

Alli said: "The last two years have been especially challenging for Koovs. The disruptions in India caused by demonetisation and the introduction of the Indian Goods and Sales Tax in July 2017 were a significant brake on Koovs’ online retail activity levels throughout 2018 and into the first half of 2019.

“Despite a good recovery in GOV and trading margin in the second half of the year, the results for the 2019 full year have reflected these regulatory challenges."