Sosandar slashes losses after revenue triples

Sosandar on Wednesday reported that it had slashed its annual losses after more than tripling revenues, though the fashion retailer's share price still slipped as its EBITDA loss failed to meet consensus expectations.

The AIM traded company achieved a loss before tax of £3.5m for the year ended 31 March, an improvement on the loss of £6.1m booked the year before, as revenue leapt by 228% to £4.4m as active customer numbers almost tripled to 62,214.

Gross margin also improved to 55.5% from 49.4%, which Sosandar attributed to growing brand awareness and demand.

However, an EBITDA loss of £3.5m was worse than consensus estimates for £3.3m of red ink, while operating losses widened from £3.1m to £3.5m when reverse costs were excluded.

For the current year, the company said it is well placed for growth across all of its key performance indicators, with growth expected to be realised through further investment into its products, teams and acquiring more customers through its marketing channels.

Ali Hall and Julie Lavington, co-chief executives of Sosandar, said: "The new financial year has started strongly and in line with our expectations with June setting a new record for the number of units sold in a month. Repeat orders for Q1 increased 122% year on year and Q1 has seen c.23% year on year revenue growth. This revenue growth has been achieved through strong repeat business with deliberately less emphasis on new customer acquisition as external factors resulted in a tougher acquisition environment."

Analysts from Liberum said the results were largely in line with its expectations, stating that Sosandar's missing out on consensus EBITDA forecasts was understandable for such a high growth company.

"Management speak of external factors impacting new customer acquisition resulting in a tougher acquisition environment, which we have heard from other companies also, particularly in relation to the rising cost of Google as an acquisition tool. Anecdotally, we have heard that June in particular has been a tough month for the retail sector, particularly in clothing. Sosandar, though, is a young brand growing quickly and management has strong experience in this regard," said analysts.

Sosandar's shares were down 14.94% at 16.80p at 1058 BST.