LONDON: British women’s fashion retailer Sosandar PLC (AIM:SOS) reported a year of improved profitability driven by higher margins, despite a planned reduction in revenue, and signalled a return to growth in its first quarter, according to full-year results released on Tuesday.
For the year ended March 31, 2025 (FY25), revenue fell to £37.1 million, down from £46.3 million the previous year. The company attributed this decline to a deliberate strategy of reducing price promotions to enhance its gross margin, which rose significantly to 62.1% from 57.6%.
This focus on margin delivered improved underlying profitability. Sosandar reported an adjusted profit before tax of £0.2 million, reversing a £0.3 million loss in FY24. This figure excludes one-off costs of £0.2 million related to a warehouse move. However, after audit adjustments including a £0.4 million stock write-down and additional warehouse move costs, the audited loss before tax was £0.1 million. Sosandar maintained a robust net cash position of £7.3 million.
Operationally, FY25 marked a significant transition. The company successfully shifted its Sosandar.com business away from heavy promotions. Trading with third-party partners remained strong, and it opened its first six physical stores. Sosandar noted its market town stores are progressing towards profitability faster than shopping centre locations. A new licensing agreement with Next Plc for homeware followed the continued success of Sosandar’s clothing range sold through Next. The company also completed a move to a new third-party warehouse.
Trading in the first quarter of the new financial year (Q1 FY26) showed a return to revenue growth. Net revenue reached £9.5 million, a 15% increase year-on-year, despite losing sales through key partner Marks & Spencer since mid-April due to a cyber incident at M&S. Crucially, Sosandar’s own website also saw revenue growth of 15%, driven by increased traffic, conversion, and orders.
Gross margin continued to improve, reaching 65.0%. The quarter remained cash generative, with the cash position rising to £8.0 million by June 30, 2025.
Given the ongoing impact of the M&S cyber incident on third-party sales and a strategic decision to pause new store openings to focus on achieving profitability in the existing six stores, Sosandar adopted a prudent outlook. The company revised its FY26 revenue guidance to £43.6 million (representing 18% growth) and expects a profit before tax of £0.4 million.
“We’ve strengthened the foundations of the business,” said Co-CEOs Ali Hall and Julie Lavington. “Reducing price promotions resulted in an expected revenue reduction but significantly improved margins and cash generation… We believe we are now at an inflection point, with the foundations laid for profitable, cash generative growth.”
The founders highlighted the milestone of opening physical stores and learning from the initial portfolio, leading to the pause on further openings. While moderating near-term expectations due to the M&S situation and store focus, they expressed confidence in leveraging brand equity across multiple channels for future growth.