The rapid growth story at Sosandar may not be quite as spectacular as it once was given that the company is much bigger than a few years ago. But it’s continuing with the company hailing a “robust” FY24 performance helped by a “continued focus on margin, profitability and cash generation”. 

But before we look in detail at those annual results, it’s worth looking at what’s happened since the trading year ended with the company on Tuesday also delivering a Q1 update covering the period from April to the end of June.

One big development has been that its first two store leases were signed with the company well on the road to transforming itself from an online-only business into an omnichannel one.

In Q1, it saw a continued focus on prioritising margin enhancement and profitability with an 80% reduction in price promotional activity on Sosandar.com vs the same quarter last year. There was a 670bps improvement in gross margin to 63.4%, from 56.7% a year ago, and a “substantial positive swing from [a] £0.8 million pre-tax loss in Q1 FY24 to [a] £0.2 million pre-tax loss in Q1 FY25”.

Margin focus

Not that sales rose. Net revenue of £8.2 million (down from £11.4 million a year earlier) reflected the “prioritisation of increasing gross margins to improve profitability”.

The balance sheet also remained “robust” with the cash position flat at £8.3 million as of 30 June vs 31 March, “allowing us to self-fund the planned store rollout”.

Sosandar said this is “highly encouraging” and reflects its prioritisation of margins with reduced discounting ahead of planned store launches. 

It’s early in the year to predict full-year results, but pre-tax profit levels “are expected to remain in line with expectations, despite lower revenues, which are now likely to be in line with the prior year” due to that margin focus. Before the publication of the latest update, market expectations for the year ending 31 March 2025 were for revenue of £54.6 million and pre-tax profit of £1 million.

So what about those FY24 results? As the company transitioned to becoming a true multichannel retailer, “the second half of FY24 saw the prioritisation of margin enhancement and profitability, the result of which can be seen in the margin uptick and upswing in pre-tax profit in H2”.  

Net revenue grew 9% for the year to reach £46.3 million and the improved gross margin reached 57.6% for the year as a whole (up from 56.2%) and hit 59.6% in the second half alone. 

Overall, the company lost £0.3 million for the year following that rise in pre-tax profit in the second half to £1 million.

It said its product continues to resonate with customers with partywear, dresses, tailoring, knitwear and denim being standout items. 

Trading with well-established third-party partners has also continued to be strong.

Expansion via stores

That bodes well for the future, as does the signing of those store leases. The first two Sosandar stores signed for are in Marlow and Chelmsford. The Marlow store is on the High Street there and the Chelmsford store is in the heart of the town, on Bond Street.

Ali Hall and Julie Lavington, Co-CEOs, said in a statement: “We have delivered a robust financial performance for FY24. This has been achieved against one of the most challenging backdrops our industry has experienced and is a testament to how our customers feel about our on-trend, affordable, long lasting, lifestyle appropriate clothes.   

“The transition to becoming a true multichannel retailer, with our products being sold on our own site, our mobile app, through our own stores and via highly reputable third-party partners, is well under way. 

“We have refined our focus and built a roadmap that will shape our decision-making over the coming years. The core ingredients to this include prioritising margin and sustainable profitable growth rather than revenue growth through promotional activity. In doing so, we will leverage our brand equity, creating our own marketing ecosystem through our stores which will enable us to own our customers directly.”

As for those store locations, they said they’re “in top tier locations, located in the right position in affluent, thriving locations where Sosandar customers over-index. Throughout the process we have remained disciplined in our approach to ensuring ‘right price, right location’. We look forward to the official opening of them over the next few months, and with others to come”.