Koovs upbeat despite market challenges

India-focussed fashion e-commerce retailer Koovs issued its interim results for the six months to 30 September on Tuesday, with gross sales at £7.9m for the period.

The AIM-traded company said that was in line with India's ecommerce market which was flat, impacted by demonetisation, the introduction of the goods and services tax, and heavy discounting and marketing expenditure by sector peers.

Quality of sales improved, however, with the board reporting that markdown sales reduced to 20% of sales from 29% in a market driven by high discounting.

Its trading margin increased significantly to 18% from 2%, while its average order value increasing by 21% £17.00.

Brand awareness increased to 21% from 15%, according to the board.

It said the sales and increase in brand awareness came about despite its “significantly reduced” marketing spend.

It also struck international distribution agreements with Souq.com in Middle East and Simply Be in UK during the period.

A recent Forrester survey for customer experience ranked Koovs number one for "best customer experience" among online-only retailers in India, the board highlighted, adding that its social media presence grew by 29% to 2.2 million followers during the period.

On the financial front, group revenues fell to £3.9m for the period from £4.0m, while the group gross margin improved from -20% to 0%.

Operating costs reduced by 9% to £7.7m, and the loss for the period reduced by 15% to £7.8m.

Cash utilised in the period reduced by 44% to £6.8m, with funding of £8.9m received in the period through the issuance of 6% convertible loan notes.

“I am pleased with the progress we have made in our business fundamentals,” said Koovs CEO Mary Turner.

“Year-on-year trading margin has been improved from 2% to 18% and brand awareness is up from 15% to 21%.

“In addition, Koovs is now ranked number one for customer experience by Forrester Research and has the highest net promoter score in the fashion vertical (RedSeer) ahead of Amazon and Flipkart.”

Turner said it had been a “challenging year” generally for the market, however with its “strong” business fundamentals, she believed Koovs was well positioned to capitalise further on the growth opportunity.