Sosander to open first physical stores in 2024
Looking ahead, the company expects revenue to grow by 10% year on year for FY24 to £46.8m and to remain in profit during the transition
UK fashion brand Sosandar is set to launch its first set of bricks and mortar stores in Spring 2024 after seeing continued growth in the market.
The brand stated that the opening of the new stores will open up 60% of the £55bn annual clothing market in the UK that is transacted in physical stores. It added that it will also significantly expand the company’s addressable market into more locations.
The investment in the store opening programme will be self-funded from the company’s existing cash resources.
The investment will include people, store execution, infrastructure as well as supporting margin growth.
Following the announcement of its store launch, the brand has also provided a trading update covering the six-month period ended 30 September 2023 and an update on the expansion of its omnichannel strategy.
The group reported a loss before tax of £1.3m despite seeing a 6% increase in revenues to £22.3m in H1 2024.
It stated that the pre-tax loss was driven by a trialled reduction in promotional activity in Q2.
Looking ahead, the company expects revenue to grow by 10% year on year for FY24 to £46.8m and to remain in profit during the transition.
It also expects revenue in the year ending 31 March 2025 (“FY25”) to grow by 17% year-on-year to £54.6m with an upward trajectory in profitability.
As the brand moves to being an omnichannel retailer, it is investing in moving away from price-led promotions, one of the key operating norms of pure play retail.
It will significantly reduce price promotions in order to grow its margin by transitioning customer behaviour to the non-promotional led proposition it already operates “successfully” across all its third-party channels.
The brand also intends to operate the reduced promotional proposition across all sales channels by the time the stores launch in spring 2024. The aim is to begin delivering significantly higher gross margins, putting the company on a trajectory to deliver pre-tax profit margins of at least 10% in the medium-term.
In addition, due to strong interest from third parties overseas, the company is also expanding its presence internationally, and has signed agreements with The Iconic in Australia and The Bay in Canada to begin selling online in Q4 of the current financial year ending 31 March 2024 (“FY24”).
Sosander said it believes this is the “right strategic course of action to deliver significantly higher gross and pre-tax profit margins for the business and ultimately generate greater shareholder value”.
Ali Hall and Julie Lavington, co-CEOs, said: “We are extremely excited about the next stage of our growth journey. Our decision to open our own stores is the logical next step as we look to offer our customers more ways to engage and shop with Sosandar. We know that the added value of being able to touch and feel our clothes will appeal to our target customers. With a clear rollout plan in place and strict criteria around the location of potential stores, we are confident that our stores will enable us to accelerate our market share and increase the awareness of our brand.
“We are also delighted to announce our first international third-party partners. Over the last few years, we have demonstrated how successful these types of agreements can be, and after an extensive and thorough period of research, we believe that the first partners we have selected are the perfect fit to launch our international growth. We have no doubt that our unique and diverse product range will resonate with customers globally, just as it has done in the UK.”
They added: “Whilst we do expect to see a short-term impact as we transition the business to offer less promotional activity, we still expect to be in growth and remain profitable. This strategy is undoubtedly the right course of action to deliver greater profitability and therefore greater value to our shareholders.
“To be able to capture the 60% of clothing expenditure coming from physical stores is a massive opportunity. The Sosandar brand could not be in a stronger position, and we have every confidence in our brilliant team to execute successfully as they always have done. We believe that the future is very bright as we take the Sosandar brand to more customers across the UK and worldwide, we continue on our journey to become one of the largest womenswear brands globally.”
