In The Style expects to incur EBITDA loss as revenues decline
Salford online fashion retailer, In The Style, said full year revenues will decline for the current financial year, leading to an EBITDA loss.
The company floated in March 2021 with a market value of £105m. Following today’s (January 20) update to the stock market its shares plummeted by more than 27%, giving it a value of £4.28m.
Today’s statement, covering the three months to December 31, 2022, said total revenue in the period declined by 22% compared with the previous year. Direct to consumer revenue decline by 13% and the gross margin for the quarter was lower than expectations, but broadly in line with several of the group’s peers.
The group said it has managed stock levels well through the peak trading months and closed the quarter with stock of £3.2m, compared with £3.6m a year ago.
Cash at the end of December was £3.2m with the group’s invoice discounting facility which would provide an additional £0.4m of liquidity remaining undrawn.
It said it now expects revenue for the full year to be in the region of £46m, reflecting market-wide cost-of-living pressures on consumer demand, higher levels of markdowns and a reduction in wholesale demand.
As a result of lower than anticipated revenue and gross margins, it is now expected that the group will report an Adjusted EBITDA loss of between £4.25m and £4.75m for the year.
On December 8, 2022, the company announced it was to conduct a strategic review of the group’s business as a whole and that it had appointed Lincoln International to assist with the process, which could include a sale of the business or some of its assets.
The review is ongoing a further update will be made in due course, it said.
Interim CEO, Adam Frisby, had led the group for nine years until January last year when he stepped aside and took on the role of chief brand officer. After last month’s announcement he returned as interim CEO and the then CEO, Sam Perkins, left the business at the end of December.
Frisby said: “Following an encouraging performance in November and throughout the important Black Friday trading period, the trading environment in December was more difficult.
“This reflected high levels of markdown activity across the market, disruption to delivery services, and the impact of cost-of-living pressures on our customers.
“Despite these challenges, we are encouraged by the positive customer reaction to FITS, our own brand range, which provides an exciting opportunity for us to further leverage the strengths of our influencer collaboration model.”
He added: “We are firmly focused on launching exciting, unique and inclusive new collections for our customers in collaboration with our influencer partners as well as tightly managing stock, costs, and cash. I remain absolutely confident in the fundamental strengths of the In The Style brand as well as our differentiated model.”
