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Still no director buying even at these low prices..l don't think this company gives an Xmas trading update,so we have a long wait for any news to possibly lift the shares
Please explain how you get to 4p valuation.
If they get to £10 net profit and are still growing in 2025 then on 15x multiple the share price could be 59p. Although with continual share awards it might be more like 50p.
Yes but Sos is now not worth more than 4p. There is every chance that the stock will be bust within 2 years. It is in the worst business at the worst time. Things are getting worse and the future is dire. More tax on the way and a lot more conflict.
Not the fault of the company. A terrible time to be in small caps like this. Most will go bankrupt
Your timing seems good..AIM shares are on the floor..Did you know that in 2022,AIM market was the WORLD'S worst performer,so the only way is up (but not in a straight line) Sosandar is a minimum 2 year hold..The problem is most of us have bought shares previously when SP was higher and now face a long wait just to break even
No bounce back today..This looks like it is heading for a slow descent into single digit SP..No share buying by the directors,even at this price.
With reference to my point (3) below, I'd accept that by not discounting SOS may have lost out on some customers who are more price driven than product/quality driven but it's difficult to target discounts at just those customers alone (unless they fall into the catch-all of new customers) i.e. you either have to offer discounts to all or accept that you will miss out on some opportunities. This would likely have been factored into SOS's internal assessment of whether or not to continue to try and chase revenues in the current market environment or maintain margins.
Also, today's announcement does not mean that SOS couldn't revert back to the previous strategy in FY26 and beyond if the market environment became more benign. Maintaining margins and cutting their cloth to fit is a reflection of the times and it would appear that SOS expects the current market environment to persist into FY25 at least.
It's a set back but not a knock out.
The overseas expansion plans seem sensible and the costs controllable. Also, it remains to be seen whether there are any benefits to be garnered from the southern hemisphere seasonal cycle being the opposite of the northern hemisphere. SOS could potentially be launching its summer/autumn collections into Australia at the end of FY24. Whether those collections will be based upon its existing 2024 collections, its intended 2025 collections or a mix of both will be interesting. It's rarely cost effective to ship any unsold stock from one country to another and one assumes that stocks supplied to their partners in Australia and Canada will be supplied direct from their suppliers.
One would assume that any roll-out of bricks & mortar outlets will be done slowly and steadily. A half dozen outlets over a couple of years in a selection of handpicked locations should be manageable as a proof of concept.
A lot of rubbish being spouted on bulletin boards today IMHO.
Here are some key take outs:
1) SOS is not immune from the general economic malaise;
2) Shoppers currently have less discretionary spending and arguably, at least in the short-term, most spending on clothing is discretionary to a greater or lesser extent;
3) Discounting to try and increase revenues when people increasingly have a specific need and only a fixed budget to spend can backfire e.g. you're better off selling two garments at £100 than three garments at £100;
4) Discounting to increase revenues does not always boost the bottom line e.g. if you drop prices across the board by, say, 10% then you need a c22% increase in revenues (from your lower base) just to achieve the same level of gross profits, all other costs being equal;
5) SOS hasn't ruled out all discounting;
6) SOS geared up its operations, in accordance with its original budget forecasts, for a substantial increase in FY24 revenues which, as H1 progressed from Q1 to Q2, became increasingly apparent was no longer achievable;
7) Having previously committed to a more rapid expansion of sales and having recruited and trained additional staff to facilitate said expansion, SOS couldn’t just shed those additional costs immediately;
8) SOS moved from one sales strategy in Q1 to another in Q2 and I’d hazard that it probably incurred an additional c£500k-£1m of operating costs in H1 than it might have done had it anticipated that the economic climate would require this strategic change 6-18 months ago;
9) I’d also hazard that if SOS had continued to pursue a strategy of discounting to increase revenues in Q2, rather than maintaining gross margins, its operating loss would have been even higher i.e. the additional revenues would not have been able to make up for the loss in gross margin (I suspect SOS would have modelled this based on H1 trends before making the decision);
10) You have to adapt and change with the times rather than fretting over spilt milk;
11) SOS has never been shy of changing its modus operandi when needs dictate e.g. COVID, regardless of the short-term impact (SOS has always preferred to act rather than wait in hope);
12) It's clear that SOS has taken on additional operating costs to prepare the ground for international expansion and new bricks & mortar outlets (I wouldn't be surprised if these additional costs exceed £1m pa);
13) These additional (discretionary) costs can be shed further down the road if the plans do not progress;
14) The demise of the UK high street is much overstated - even Shein operates bricks & mortar outlets in the UK! (one has to assume that fashion retailers have a far better understanding of their business needs than most armchair analysts); and
15) A high street expansion in the right locations is not necessarily doomed to failure, as some like to suggest, but you have to reckon with a 2-3 year payback period
I suspect that these ladies know a lot more about women’s fashion than the posters on this board. They seem to have their heads screwed on. Time will tell.
Today’s announcement re opening stores in high-grade retail centres seems to run counter to also taking floor space in a mid-range supermarket alongside its own basic (and in my view horrible) low budget range . Sosandar was launched with a clear strategy of not owning bricks and mortar, but now the thinking seems all over the shop (pardon the pun).
Spot on..It has set back meaningful profitably for at least 2 years..In the end they will justify a capital raise by saying store expansion needed as stores are doing well..In the end l can only see two possible compatible suitors..Next and Zara owners..Let's keep our fingers crossed for any rumours to lift SP
I agree Glowacki.
The board is trying to run too soon. The market sees another capital raise in prospect. Stores will be expensive and no profits for another couple of years.
Sosandar Joint CEOs, Ali Hall and Julie Lavington and CFO, Steve Dilks present a Trading and Strategic Update for the first half of 2024, outlining the company’s performance as well as their omnichannel strategy, launching its first bricks and mortar stores plus international launches in Australia and Canada.
Watch the video here: https://www.piworld.co.uk/company-videos/sosandar-sos-h1-trading-and-strategy-update-october-23/
Or listen to the podcast here: https://piworld.podbean.com/e/sosandar-sos-h1-trading-and-strategy-update-october-23/
The one really dumb thing the directors did today was announce an expensive strategy change at same time as company moved from profit over 6 months to a loss...Had they waited until they could show an increasing profit,and then announce the new strategy,the SP would have rocketed upwards..Right now it looks like trading losses with much bigger increase in expenses coming up in 2024... Strategy is excellent,but timing sucks.
A poor decision to open own stores on High Street in affluent towns IMO. Customers can touch and feel the product when in store at Sainsbury for example and they should have waited to see how this actually plays out in terms of sales. A strange time also to make such a decision. Yes, the typical customer if affluent and may not be as impacted by the cost of living crisis or a recession, but they are affluent career women who are time constrained and enjoy the efficiency of the online experience. This company is not ASOS or Boohoo, instead with Sosandar the quality is a given so I’m not sure that the touch and feel aspect is that big a deal. That said, I assume they’ve done the market research, so hey, what do I know?
Yes but you can say the same about Quiz. I think people are fed up with online stuff unless it is really cheap like shein. But the costs of having stores and business rates etc. staff costs are getting higher and higher and Labour are committed to getting rid of zero hour contracts and controls on strikes etc. no wonder mkt hates this statement. 5 pence on the way if they actually start buying stores.
All good points. the only real question is at level to buy the shares, if the hope is for a buyout. certainly, the markets/pi's think bricks and mortar are a pointless expense, even with the high street presence it gives. it might well be a canny move for the economic turn but as we seem to be heading still for more economic uncertainty i canwell imagine the sp wouldn't be where it is now if that wasn't part of the new strategy. maybe further down the line? or maybe they feel the turn is going to be slow but the set up will take a year, at best, to fully operate.
all that can really be said is the price is cheaper but how cheap would you want to throw you lot in with them to insulate your cash from existing headwinds?
Next recently acquired FatFace despite already stocking FatFace clothing (it's also acquired several other brands that it was already stocking). Buying cuts out the middle man and would also give Next direct access to SOS's suppliers and additional scope for economies of scale; not that I'm advocating a buyout by anybody.
"The company is profitable."
I must be reading a different Trading Update.
Garbage. Sales haven't actually fallen in Q2 compared to FY22 unlike some of their peers e.g. ASC, BOO, QUIZ, SDRY etc. SOS pivoted (more like a handbrake turn) its strategy between Q1 and Q2. It's highly likely that they would have taken on board certain additional operating costs during Q1 in expectation of scaling up volumes that will now take longer to absorb (there will no doubt be scope to cut some of these costs if necessary). Also, they've taken on a number of additional high level staff with a view to their new bricks & mortar and overseas ventures, plus invested time and costs in progressing these ventures. These are additional costs that can be jettisoned further down the road if plans have to change.
You can't make a pivotal change in strategy (chasing margins rather than volumes) without some short-term disruption. It's way too soon to make any conclusion. They now need to meet, if not exceed, their new FY24 revenue targets and prove the margin improvement. That said, it would now seem difficult to achieve anything better than breakeven for FY24 (which is quite a come down from the prior year and previous forecasts) and I'm not sure how this lines with statements made in the investor presentation to the effect that they remain profitable (allowing for depreciation and other non-cash expenses they might be cash flow positive but that's not the same as profitable).
People have been saying that SOS is going to go bust for years now and each year SOS has proved their doubters wrong. I'm inclined to give the management team the benefit of the doubt but they do need to deliver a sound H2 (one week does not prove anything but at least they've had a good start to H2).
Don't Next already stock their clothing? What would be the point of buying the company when they can stock their clothing without the grief of ownership? As they're also stocked by M&S, unless SOS find some locations that Next see as desirable, zero point in that as a possible.
The SP is down because investors believe the strategy of high cost physical stores will set back profitability for several years..However as usual directors have got their finger on the pulse,in identifying that clothing retailers these days need to be a mix of stores and online.. Particularly for sosandar as they do not cater for youngsters..However the shares are too illiquid for any meaningful bounce back...Sosandar is a perfect fit for Next and can only hope for a takeover..The company is profitable.
Can see this going bust before being bought out... the share price movement suggests so.
At £30m its pocket money for the likes of ashley
Limited stock to buy now
Bounce coming
Company adopting the entirely wrong strategy.... this will be bought out.