Sosandar signs deal with Next, John Lewis; sales surge 62%

(Sharecast News) - Shares of Sosandar surged on Tuesday after the online fashion company reported a jump in revenue and said it will launch on John Lewis and Next's websites later in the year.
In the period from 1 April to the end of May, revenue rose 62% on the year, with new customer acquisition up 15% and order growth of 44%. This was despite a 69% reduction in marketing expenditure and "demonstrates the benefit of having a larger customer database as a result of previous customer acquisition expenditure," it said.

Sosandar saw a 55% reduction in losses over the period, while traffic was up 98% year-on-year.

In addition, the company has reached agreements with John Lewis and Next to go live on their online platforms in Autumn/Winter 2020.

Sosandar expects full-year revenue to double to at least £9m, but the loss for the year is expected to be "slightly higher than anticipated". This is partly down to higher-than-expected returns on sales immediately prior to the Covid lockdown announcement.

"These results have been achieved against an industry backdrop where the online clothing market was down 24% in April and indications are that May also saw a year on year decline," the company said.

"Underpinning these results, we have seen a shift to more casual ranges as customers seek out comfort with fewer social occasions calling for more formal product types. As a result, the business quickly changed new-in products to meet these changing needs and has had a number of loungewear items, denim and casual summer dresses which have sold out in days and quickly repeated, as well as benefiting from customer waitlists which ensure quick sell through."

Sosandar highlighted "the strength" of its balance sheet and said it's confident existing finances are "sufficiently resilient" to withstand the current crisis.

At 1255 BST, the shares were up 37% at 12.01p.

House broker Shore Capital said: "In our view, this is a reassuring statement, particularly in relation to current trading. We believe that the company has responded in an agile manner to the challenging trading conditions, managing both its cost base and relying on the strength of its large customer database from its previous customer acquisition expenditure.

"The addition of Sosandar ranges to both John Lewis and Next websites from the Autumn will deliver potential opportunities for new customers to interface with the Sosandar brand.

"As we have highlighted the company is confident in its ability to acquire new customers, once more normal trading conditions return. The business will need to scale up to reach profitability in time but they have proved an ability to generate positive order contribution and as we have highlighted the strength of the balance sheet makes it resilient to come through the current crisis and invest again to continue its potential growth trajectory.

"Whilst the outlook remains uncertain, for now, we will watch with interest how trading evolves post the relaxing of lockdown for non-essential UK retailers on 15th June, noting we keep our forecasts withdrawn given, the significant lack of visibility still inherent in the current UK consumer environment."