Sosandar PLC (LSE:SOS) Full Year 2024 Earnings Call Highlights: Strategic Growth Amidst Revenue ...

GuruFocus News
3 min read

In This Article:

  • Revenue: Increased by 9% to GBP46.3 million for FY24.

  • Gross Margin: Improved by 140 basis points to 57.6% for FY24; Q1 FY25 margin increased by 670 basis points to 63.4%.

  • Profit Before Tax (PBT): FY24 full-year loss of GBP0.3 million; H2 FY24 profit of GBP1 million compared to H1 loss of GBP1.3 million.

  • Cash Position: Strong with a balance of GBP8.3 million as of March 31, 2024.

  • Inventory: Reduced by GBP1.5 million, reflecting a focus on full-price sales.

  • Q1 FY25 Performance: Net revenue reduced to GBP8.2 million from GBP11.4 million; loss reduced to GBP0.2 million from GBP0.8 million.

  • Store Rollout: Launching first stores in Chelmsford and Marlow; each store expected to cost GBP250,000 in CapEx and GBP50,000 in stock.

  • Average Order Value: Increased by GBP5 year-on-year.

Release Date: July 16, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Sosandar PLC (LSE:SOS) achieved a significant improvement in gross margin, increasing by 670 basis points to 63.4% in Q1 FY25.

  • The company has a strong cash position with a balance of GBP8.3 million, allowing it to self-fund its store rollout program.

  • Sosandar PLC (LSE:SOS) successfully reduced price promotions, leading to a substantial increase in profitability.

  • The company is launching its first physical stores, which are expected to enhance brand visibility and have a compounding effect on online sales.

  • Sosandar PLC (LSE:SOS) has established itself as a top-selling brand with major retailers like Next and Marks & Spencer, demonstrating strong demand for its products.

Negative Points

  • Revenue in Q1 FY25 decreased to GBP8.2 million from GBP11.4 million due to reduced price promotions.

  • The company reported a full-year loss before tax of GBP0.3 million for FY24, despite improvements in H2.

  • There was a considerable delay in the store opening program, initially planned for Spring 2024.

  • Sosandar PLC (LSE:SOS) ceased trading with The Bay in Canada due to technical issues with the partner's marketplace.

  • The reduction in price promotions led to a decrease in conversion rates on the company's website from 4.1% to 3.4%.

Q & A Highlights

Q: What gross margin is Sosandar ultimately targeting and over what time frame? A: Stephen Dilks, CFO, stated that Sosandar aims for a gross margin between 65% and 70% over time. This will be achieved by reducing price promotional activity and leveraging scale from store openings to buy stock cheaper. A margin of 67.5% is realistic, with potential to reach 70% in the coming years.

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