Sosandar falls after reporting slight margin slippage in H1 2023

By Geoffrey Smith 

Investing.com -- Sosandar (LON:SOSS) stock fell 4.5% in early trading on Tuesday after the U.K. fashion group said that its gross margin slipped in the six months through September, stoking fears that the fast-growing company may not be immune to the broader slowdown in U.K. retail after all. 

Gross margin fell to 54.4% in the first half of its fiscal year, from 56.5% a year earlier, which the company put down to "more normal post COVID trading period, including a planned end of season sale in August." That meant that there was no sequential improvement in pretax profit, which was effectively unchanged at £0.1 million (£1=$1.2286).

The news overshadowed the company's announcement of a "strong" start to the second half, with record sales in October and November that showed a return to improved margins. It didn't give any more precise numbers for those months but said its net cash stood at £4.2M at the end of November, unchanged from the reporting date of September 30th. 

Co-chief executives Ali Hall and Julie Lavington acknowledged that the "external environment remains challenging," but said that the company is trading in line with expectations of full-year revenue of £42.8M and pretax profit of £2.0M.

"It is important to note that as a business, we have successfully mitigated many of the headwinds we have faced over the past two years," they said, adding that they "remain confident in the longer-term outlook for the business." 

The group said orders from its own website rose 43% from a year earlier to 347,137 in the first half, with nearly a quarter of those coming from new customers. Order frequency rose 8% and the conversion rate, which measures orders against visits, rose to 4.5% from 3.9% a year earlier.  Average order values rose 4% to £90.