Womenswear retailer Sosandar’s full-year results and first-quarter trading update on Tuesday talked of “a year of margin growth and improvement in profitability, with a return to revenue growth in Q1 FY26”.
Sosandar
The company had once been used to reporting regular sales leaps but as it’s got bigger, growth has slowed and strategy changes to focus on full-price, as well as heavy investment in stores, all had an impact in recent periods.
But while revenue fell in FY25 (more of that later), looking at the most recent figures, in Q1 FY26 (that is, April to June), revenue rose 15% year on year to £9.5 million. This was impressive given that it despite no sales through M&S, its second-biggest third-party partner, since mid-April due to the well-publicised cyberattack on that retail giant.
Importantly, its own website also returned to revenue growth with a 15% rise versus the prior year, driven by an increase in traffic, conversion and the number of orders from both new and existing customers. And there was a continued improvement in gross margin to 65%.
Q1 also continued to be cash generative, with the cash position standing at £8 million as of 30 June.
Not that the company is being blasé about it return to growth. Following the M&S cyber incident, Sosandar is “cautiously anticipating lower revenue through Marks & Spencer for the rest of FY26”.
It also said it’s “continuing to take learnings from initial store openings with [a] focus on getting the six stores opened so far to profitability and pausing before opening any further stores”.
The M&S situation alongside the decision to focus on the existing store portfolio, means that the business is “taking a prudent view and is therefore modifying FY26 guidance”. It now expects FY26 revenue to be up 18% to £43.6 million, with an expected profit before tax of £0.4 million.
Transitional year
So that’s the future, but what happened in FY25? The year to the end of March 2025 saw revenue of £37.1 million, down from £46.3 million, “reflecting a deliberate transition away from price promotional activity in order to improve gross margin”.
And that gross margin definitely benefited, rising to 62.1% from 57.6% a year earlier, boosting profitability despite the reduction in revenue.
Adjusted profit before tax was £0.2 million, up from a £0.3 million loss in the previous year, excluding the one-off costs associated with a move of warehouse (£0.2 million). And it maintained a robust net cash position of £7.3 million despite self-funding the rollout of its own stores (£8.3 million as of 31 March 2024).
The company also said it’s reporting an audited £0.1 million loss before tax for FY25. This differs from the £0.5 million profit before tax that it forecast in the trading update released on 16 April, the difference being due to adjustments arising from the audit including a stock write-down and additional one-off costs.
Market expectations for FY26 had been revenues of £46.2 million and adjusted pre-tax profit of £1.5 million.
Trading with well-established third-party partners was strong during the period and, as referenced earlier, it opened its first six stores as it “transitioned to becoming a full-price multi-channel retailer with market town stores on a quicker trajectory towards profitability than shopping centre stores”.
It also signed a licensing deal with Next for a Sosandar homewares range on the back of the “continuing success” of its clothing range sold through the retail giant. And it “moved to a new third-party warehouse provider in February, well suited to Sosandar’s growth ambitions”.
In a prepared statement, Co-CEOs Ali Hall and Julie Lavington, said: “During the last year we’ve strengthened the foundations of the business, which will enable us to deliver our growth and profit ambitions going forwards. Taking the decision to reduce price promotions has resulted in an expected reduction in revenue but significantly improved margins and cash generation which, in turn, has allowed the group to maintain a robust balance sheet and self-fund its growth plan.
“The opening of our first stores was a milestone, and we are pleased with how we have brought our brand to life in the physical retail environment. We have taken clear learnings from the trajectory of our stores in market towns versus shopping centres and are focused on getting our existing portfolio to profitability before opening any further stores. This decision, alongside the continuing impact from the Marks & Spencer cyber incident on our third-party sales, means we are moderating our expectations for revenue and profit growth in the current year.
“Nonetheless, we believe we are now at an inflection point, with the foundations laid for profitable, cash generative growth, and we have returned to revenue growth in Q1 FY26. We will continue to leverage our brand equity and scale the business through our multiple channels and are excited for what lies ahead for Sosandar.”
