In order to mitigate the effects of the M&S cyberattack on its sales, Sosandar has lowered its profit and sales guidance for the year.
Following its decision to halt the opening of new stores to focus on profitable growth—and the fact that it had made no sales through M&S, its second-largest third-party partner, since mid-April—the fashion company stated that it was adopting a prudent view of its projections. It anticipates that sales delays through M&S will last until at least August.
As a result, the online retailer has reduced its full-year sales projections by US $ 3.33 million and now anticipates an adjusted pre-tax profit of US $ 512,000, down from the initially projected US $ 1.79 million.
Sales increased 15% to US $ 12.16 million in the first quarter, indicating that Sosandar had resumed revenue growth despite the loss of income from M&S.
According to the latest performance update, the retailer’s adjusted pre-tax profit for the year ended March 31 was US $ 256,000, compared to a US $ 384,000 loss the previous year.
The company stated that a strategic shift away from price-promotional activity led to the 19% decline in sales to US $ 47.49 million.
Sosandar co-chief executives Ali Hall and Julie Lavington explained that the decision to reduce price promotions resulted in a predictable drop in revenue but led to significantly improved margins and stronger cash generation, which allowed the group to maintain a robust balance sheet and self-fund its growth strategy.
They also noted that the company had drawn key insights from the differing performance of its stores in market towns versus shopping centres and is now focusing on bringing its existing portfolio to profitability before pursuing further expansion.
They concluded that this strategic shift, combined with the continued impact of the Marks & Spencer cyber incident on third-party sales, has led the company to take a more conservative stance on revenue and profit growth expectations for the current year.
