Sosandar, the celebrity-endorsed women’s fashion brand, benefits from a simple and scalable capital-light online model, a fast-growing affluent customer base and a robust pipeline of new styles introduced each month. The company is achieving impressive growth across all key performance metrics and has a solid balance sheet to support its rapid expansion in the UK and, we believe, internationally over the medium term.
Sosandar is a pure-play online retailer of apparel, footwear and accessories with a refreshingly clear objective: to design and sell high-fashion and high-quality, affordable items to an underserved group of women, typically in their mid-30s to mid-50s. The brand was launched in 2016 by fashion industry professionals, Ali Hall and Julie Lavington, and brought to market in November 2017. The recent H119 results showed impressive growth across all key metrics. Sales quadrupled y-o-y to £1.8m, coupled with a +900bp increase in the gross margin and a sharp decline in the total cost/sales ratio, driven by scale economies. Net cash stood at £2.6m, excluding £3m of proceeds from a successful equity placing after the period end.
Recent investment in the e-commerce platform and the move to a seven-days-perweek service from Clipper Logistics has improved web functionality and delivery options. Each month c 70 new lines are introduced, compared with 20–30 a year ago, and lead times have been reduced to c 10 weeks. Celebrity endorsements continue to complement the paid-for marketing campaign and the average order value has increased by c 25% to £105 since launch. Given the scalability of the model, we believe international expansion is likely to be a medium-term objective.
Consensus estimates forecast a robust two-year sales CAGR of 165%, albeit from a low base. As an early-stage growth company, there is a balance to strike between aggressive investment in top-line growth and the desire to achieve profitability, currently anticipated in FY21.
The shares have approximately doubled since IPO and trade on an FY19 EV/sales multiple of 7.1x, reducing to 3.1x in FY20. There is execution risk; but the simplicity of the model and strong balance sheet support substantial growth expectations.