Fashion retailer slashes marketing spend to conserve funds in coronavirus emergency

The founders of Sosandar

Cheshire online fashion firm Sosandar is cutting back on marketing spend in response to the coronavirus crisis.

In a trading update today, it said it experienced strong trading through January and February and into March in its fourth quarter period, resulting in revenue in the quarter to date up 203% on the previous year.

However, the recent increasing macro-economic uncertainty associated with the virus outbreak is creating a significantly more challenging and volatile trading environment, it said.

As a result, sales over the past week have been substantially weaker than expected with margins also being impacted by increased customer incentives used.

The current expectation is that, given recent developments, this trend will continue in the immediate future and the company’s performance in March will be well below forecast.

Accordingly, for the year ended March 31, 2020, the company expects its revenue to be between £9m and £9.3m and net loss for the year to be between £6.5m and £6.8m.

Sosandar said that, despite the unprecedented current situation, the group’s prior performance this year and continued customer engagement statistics showed there is a clear demand for its unique offering in the market.

However, it is currently impossible to predict the full impact on the retail sector, and the company’s business, from coronavirus.

It said the business has relatively low levels of committed expenditure and, as a dynamic business, management has decided it is appropriate to focus on cash preservation during this challenging period.

“The company will, therefore, substantially reduce its planned marketing spend in order to focus on repeat orders from the group’s existing customer base rather than new customer acquisition in the short to medium term.

“This, alongside other cost saving measures available to the company, will help preserve cash for when market conditions improve.”

Sosandar said it has a robust balance sheet and expects to end the year with cash in excess of £5m and healthy stock levels to support the business during this unprecedented time.

At this stage, Sosandar said it can confirm it is not currently experiencing any significant disruption to its manufacturing.

“Having a flexible supply base, Sosandar is able to resource raw materials and production from other geographies when necessary to ensure a minimal disruption to the supply chain.”