Jul 19, 2022
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In The Style warns of tough times but still makes progress

Jul 19, 2022

Fashion retailer In The Style Group on Tuesday said its revenue in the year to the end of March rose strongly, while gross profit was also up, although it made a net loss during the year and it warned of tough conditions out there.

In The Style

The company also updated on recent trading and said that it was "robust in a challenging environment" during the first quarter (the period from April to the end of June).

Its customer KPIs have continued to improve and return rates have been in line with expectations. And it has seen seen year-on-year revenue growth in its direct-to-consumer (DTC) channel of 12%. 

But total revenue was broadly flat in the quarter. Wholesale revenue decreased as it “reviewed how our launch model works in physical retail”. The overall gross profit margin was in line with Q1 FY22.

And it said that “as we consider the outlook for FY23 as a whole, we have to balance our confidence in the underlying business model and the opportunity to implement our growth strategy”. 

Its strategy-business model combo “provides us with a competitive edge that can be further leveraged”, but nonetheless, it’s planning for FY23 group revenue to be broadly flat, with DTC revenue growing at mid-single-digit rates. Revenue from its wholesale channel is expected to decline at a double-digit rate as it focuses on its digital partners.

It expects the DTC gross margin to reduce but wholesale gross margin to return to FY21 levels. And it’s forecasting an adjusted EBITDA loss for the year of £2 million.

So what about the most recent year? In the 12 months to the end of March, revenue rose 28% to £57.3 million and DTC revenue grew 23% to £44.7 million. Wholesale revenue also jumped with a 52% rise to reach £12.6 million. Revenue growth was driven by its “ongoing expansion and optimisation of the influencer-based business model”.

Gross profit was up 22% at £25.1 million, but the gross profit margin reduced by 2.2 ppts to 43.9% as the proportion of revenue from its wholesale channel increased.

And adjusted EBITDA fell 85% to £551,000. The loss before tax was £1.5 million, down from a profit of £125,000 a year earlier.

Its cash balance as of the financial year-end was £5.8 million, down from £11.9 million a year earlier. The fall had been expected with the company saying that cash levels dropped during the year as it invested in its technology platform and had increased working capital requirements due to growth within the wholesale channel. 

Following the year end, it entered into a new invoice discounting facility to provide liquidity over trade receivables. Cash at 30 June was £10.5 million.

Despite some of those negative figures, the company was upbeat overall and said it saw “strong progress across all of our operational KPIs”. These included total orders increasing by 13% to more than 1.5 million, and cross-platform visits up by 4% across the app and web. The conversion rate also improved to 3.16% from 2.89%. And its average order value increased 21% to reach £52. Its active customer base was up by 4% and new customers increased by 391,000. Meanwhile, order frequency was up 9% at 2.25 times a year.

During the period, the company continued to leverage its social-influencer collaboration model, launching 193 collaboration collections with 27 influencers. This influencer base included Stacey Solomon, with whom it launched its first ever sustainable collection. In fact, it's first collab with Solomon in April last year was its biggest ever single launch night.

CEO Sam Perkins said: “In our first full year as a public company In The Style has delivered further strong revenue growth, representing almost +200% on a two-year basis. This has been supported by encouraging improvements across all our key customer and brand metrics.

“We have a strong, inclusive brand and differentiated influencer collaboration model which gives us fantastic reach, highly effective marketing, and broad customer appeal.

“This year is expected to be a challenging one for consumers and retailers. We are taking actions to respond including prudent cost control, cash management and executing against our refined growth strategy.”

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