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Sosandar Joint CEO’s Julie Lavington, Ali Hall and CFO Steve Dilks outline FY24 Highlights, followed by Q&A.
Watch the video here: https://www.piworld.co.uk/company-videos/sosandar-sos-full-year-2024-trading-update-april-2024/
Or listen to the podcast here: https://piworld.podbean.com/e/sosandar-sos-full-year-2024-trading-update-april-2024/
PIs are a fickle bunch. These results were as good as baked in following the strategy pivot. SOS may have fallen short of its revised sales and profit targets but only fairly marginally. To have set a revised sales target of £46.8m and only fallen short by £500k in the current economic environment is actually no mean feat (the small loss, as opposed to the small profit, more or less followed the sales shortfall).
SOS's revised strategy is beginning to pay dividends (the profit before tax in H2 FY24 more or less matched the profit before tax in FY23. Overheads have risen but that was to be expected given SOS's new overseas activities in Australia and Canada from mid-Q3 FY24 onwards (which should now help bolster prospective H1 FY25 sales) and the push into bricks and mortar (costs are being incurred despite no stores having yet been opened). The delay in opening new stores (I think that at least one store was expected in Q4 FY24) might be disappointing but is in keeping with the management's cautious approach (they've proven themselves capable of being reactive to evolving events and I trust them to only move forward when they think the time is right and/or have the cojones to cut their losses if needs must).
They missed their revised sales target by c£500k which, with a c60% gross margin, would potentially have generated an additional profit of c£200k. A miss maybe, but not a disaster.
Overall, not too bad when you consider the current economic backdrop and how their peers are currently performing.
Looking forward, following the strategy "pivot" in mid-Q2 FY24, I'd currently expect SOS to breakeven in H1 FY25 based on H1 FY24 LfL sales and H2 FY25 gross margins and operating expenses. However, SOS is currently targeting a 17% increase in overall FY25 sales (c£54.6m) and, allowing for an increased weighting to H2, then a (say) 10% increase in H1 sales would be the current expectation which should then deliver an H1 FY25 profit of c£1.3m. Whether SOS thinks it can stay on target to deliver a 17% increase in sales in FY25 in the current economic environment remains to be seen.
I think we have to accept that it's currently a very challenging retail environment and if in H1 FY25 SOS can deliver both an increase in sales and profits in excess of (say) £500k then I think that would be a positive outturn. SOS made a handbrake turn in mid-Q2 FY24 and it was always going to take at least 12 months to wash through (including being able to pare back the additional marketing overheads that would have taken on in expectation of a renewed and enlarged marketing drive) and if SOS had continued with it's previous strategy of chasing sales at the expense of gross margins, it's probable that its FY24 loss would have been significantly higher IMHO; when people are tightening their belts it becomes unrealitic to expect an additional (say) 10%+ increase in sales just to offset not only the gross margin that you are foresaking but the increased marketing and other overheads.
"As a result of a substantial positive swing in PBT from H1 (£1.3m loss) to an expected profit of £1.1m in H2, FY24 will be broadly in line with market expectations* with a marginal loss of £0.2m expected to be reported for the year overall"
So that's a miss then.
One day, maybe, they'll deliver what they promise and long suffering holders will be rewarded - but I guess we'll have to wait a bit longer.
This from the NEXT today:-
Wolfson added that Next had been able to sell more of its pricier, better-quality items as “there appears to be something of a shift back to investment dressing with customers buying somewhat fewer, slightly more expensive items.”
Should be good news for SOS shareholders??
Someone's unloading before the fiscal year end.
Buying opportunity if it goes down another half.
I haf bought at 11.5 and sold at 12.5 and had regrets about selling when it had gone higher.
Thus time I'll hold.
It's been ver quiet on the SOS front.
Don't they release a 3 monthly update soon?
I would like to hear a progress update and if I like it I will buy more.
They will open shop and eventually a bigger fish will make an offer for the larger retail footprint.
No probs Trotsky, I'm as keen as you for one to open.
Apeirogon, I haven't been expecting a store update in the first quarter but the next TU for March FY end is due the week of 7th April. For me it makes sense that they would use that occasion to report on the final quarter and to announce shop opening plans.
I think the CEOs are good at keeping to planned deadlines - they edited magazines so know all about hitting those. They're also very experienced in marketing so I think the shop launches will come with a suitable fanfare.
I had a look again. Google lists it as a clothing shop (open 9:30am to 5:30pm) but it's not open Saturday or Sunday.
I could ignore the Google maps image not showing a shop (because if it had just opened then it would be quite possible that the Google maps image might have pre-dated the shop opening) but I find it hard to believe that a clothes shop wouldn't be open on Saturdays.
Sorry, but I think I might have given you a bum steer (particularly if the head office is located at the same address). Mea culpa
Google maps images shows no store, but does list one with "in-store shopping and delivery".
Makes sense to have a store where the head office is for management to see things first hand.
Is that a store or the head office?
Head Office
40 Water Lane,
Wilmslow,
Cheshire SK9 5AP
I you search Sosandar stores you'll find that they now have a store open on Water Lane, Wilmslow just outside Manchester (it's where a lot of PL footballers live). Not sure when it opened but Wilmslow is a good location for an up-market shop.
Does anybody have any information on SOS’s first physical store ? I was expecting some news in the first quarter
Thank you for the information. I really appreciate it.
I'm a long-term SOS holder, so I'm fairly biased, but I believe that SOS can achieve bigger and better things if given the time; I keep a watching brief on ASOS, BOO, QUIZ, SDRY etc. and SOS was the only one to deliver growth in sales in the December quarter. The pivot that SOS made in Q2 FY24 to reduce its discounting and maximise gross margins was well considered but there were inevitable short-term costs (it had to gear back its previous promotion-led sales growth plans and the additional marketing costs associated with that) and, together with the high street and overseas expansion plans, it needs a bit more time to show that its sales growth (albeit at a lower rate but higher margin) is back on track. I think the post-Xmas Q4 FY24 trading period is going to be tough (it's difficult to ignore the current wider economic situation) but am hopeful that SOS will still be able to deliver on its revised FY24 targets and beyond.
I think the market over reacted to SOS's Q2 FY24 results (which is still reflected in the current share price) and does not yet appreciate the management team's capability to deliver its long-term aims. The team is laser focused and rarely sits on its laurels. The team showed its mettle during COVID and, whilst other UK online retailers have been just "plugging the leaks" for the last 12 months (their strategies haven't really changed; they've just been downsizing), has taken decisive action to shore up the bottom line and move forward.
Hopefully we should start to see the dividends in the next 6-9 months and the share price start to improve. The analysts haven't been keen on the pivot to the high street but the truth is that if analysts ran businesses they'd probably be bust before they even opened their doors! The SOS management team understands fashion and is not prone to making rash, ill-considered decisions. Hang tough.
Caveat emptor as always
Hi Newtrader, first off, take all share bulletin board comments - including mine - with a pinch of salt as very few commentators are truly objective.
However, as objectively as I can be as a fairly large shareholder, I think Sosandar have built a strong brand but they still have to convince that they can successfully convert increasing sales into increasing profits.
I am keeping the faith but one key change this year is the move into physical shops in the Spring. If they go well then there's a fair chance of a positive rerating. Good luck...
Hi all, I'm new to this board.
I was wondering what ur view is on long term share price?
Downhill? better to sell now & cut losses or some positive news on d horizon & worth holding for a bit longer. I only have 2k worth of Sosandar, down 1k atm. Thanks for any advise u may have.
This is a tough market and it doesn't appear to be willing on the face of it to give SOS credit for continuing to increase sales and margins despite the current economic backdrop.
Nor does it seem willing to give SOS credit for changing strategy mid-way through FY24, reducing promotions and focusing on gross margin rather than top line growth at any cost; personally I think the change in strategy will mean the difference between SOS making a seven figure loss and a, albeit small, profit for FY24. In the meantime, SOS continues to pursue new overseas partnerships in Australia and Canada and opening new bricks and mortar outlets in the UK.
I think FY25 will prove to be a pivotal year.
A record quarter with revenue of £14.3m, up 23% year-on-year (Q3 FY23: £11.6m)
Gross margin 58.3% vs 56.8% in the prior year
Like for like gross margin, which excludes the increase of wholesale, was 60.7% vs 57.3% in the prior year
·
Net cash of £7.7m as at 31 December 2023 (£7.3m as at 30 November 2023)
10mil Profit on 100 mil sales is the medium term target. I am confident the leadership team will achieve that and turn this into a £150m mkt cap company in 3-4yrs.
Sosandar Co-CEO’s, Julie Lavington and Ali Hall, and CFO, Steve Dilks present Half Year results and a Trading Update, followed by Q&A.
Watch the video here: https://www.piworld.co.uk/company-videos/sosandar-sos-half-year-results-presentation-december-23/
Or listen to the podcast here: https://piworld.podbean.com/e/sosandar-sos-half-year-results-presentation-december-23/
Promising as you say. Good to hear SOS is second best women's fashion brand on NEXT.
Als the profitability of their competitors with retail chains was reassuring.
Feels like the summer share price mark down was a significant over reaction
A pretty positive presentation I thought. Given the current UK economic backdrop, the growth in sales and GP margins in October & November was good.
I'm also (generally always) impressed with the executive team. They seem to have their heads screwed on straight. They're not going to expand their planned retail estate unless each site meets their stringent criteria. Also, they're not going to just plunge into the US retail market. Instead, they plan to take on board their learning experiences in Australia and Canada first, and carefully select who they are going to partner with in the US when they do eventually launch.
As ASOS has seen, sales growth in the US can be a two-edged sword; simply rolling out your tried and tested UK operational model can be a recipe for disaster. The US is about 40x the area of the UK and the UK's population density is about 8x the US's; it's a totally different logistical challenge. Discounters aside, the US has far fewer national retailers than people might otherwsie expect, and I seriously doubt that SOS would want to consider partnering with the likes of Amazon, Target, Wal-Mart etc. Personally, I wouldn't be surprised to see SOS eventually partner with retailers, such as Kroger and Macy's, who have a strong presence in certain large US markets e.g. California, Florida, Illinois, Texas and the North Eastern seaboard.
I think it's also quite impressive that SOS is already generating c2% of its turnover from overseas without any advertising or promotion.
It all bodes well for the future IMHO.
One position filled today according to Drapers - the leading authority on fashion retailing in the UK since 6 August 1887 - is as follows:
"Sosandar names first creative director.
Womenswear brand Sosandar has appointed former Karen Millen and Coast head of brand Emily Frazer to the role of creative director."
Perhaps up to now the joint-CEOs have covered this so it should be a positive to see a creative manager of proven quality helping set the future direction of SOS.