Sosandar shares plunge as company warns of sales collapse

(Sharecast News) - Online fashion brand Sosandar has suspending marketing and warned on profits after the coronavirus outbreak saw sales plunge.
Sosandar said it had seen strong trading during the first two months of the year, with revenue in the quarter-to-date powering 203% ahead year-on-year.

But it added: "The recent increasing macro-economic uncertainty associated with the Covid-19 outbreak is creating a significantly more challenging and volatile trading environment. As a result, sales over the past week have been substantially weaker than expected, with margins also being impacted by increased customer incentives used.

"The current expectation is that, given recent developments, this trend will continue in the immediate future and the company's performance in March will be well below forecast."

The Aim-listed company now expects revenues for the year to 31 March 2020 to come in between ?9.0m and ?9.3m, and for the net loss to range from ?6.5m to ?6.8m. Analysts had been expecting revenues of around ?10.1m and a net loss of around ?5.8m.

Sosandar said it would focus on preserving cash, including "substantially" reducing planned marketing to focus on repeat orders rather than wining new customers. Investors appeared unconvinced, however, and the stock tumbled. By midday, the shares were trading 46% lower at 6.02p.

Greg Lawless, analyst at Shore Capital, called the move to suspend marketing "sensible", adding: "It is right for the company to pause it marketing expenditure now, given the uncertain outlook, and preserve the strength of its balance sheet. Sosandar is, in our view, an agile company and the disappointing March revenues are outside its control."

Shore Capital is Sosandar's nominated advisor.