Seraphine Group PLC Half Year Trading Update (5988F)
November 08 2022 - 2:00AM
UK Regulatory
TIDMBUMP
RNS Number : 5988F
Seraphine Group PLC
08 November 2022
The information contained within this announcement is deemed to
constitute inside information as stipulated under retained EU law
version of the Market Abuse Regulations (EU No. 596/2014) (the "UK
MAR"), which is part of UK law by virtue of the European Union
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the publication of this announcement, this inside information is
now considered to be in the public domain.
For immediate release
8(th) November 2022
Seraphine Group plc
("Seraphine" or the "Group")
Half Year Trading Update and Full Year Outlook
Seraphine, an international digitally-led maternity and nursing
wear brand, provides an update on trading for the 26 weeks ending
2(nd) October 2022 and full year outlook.
-- Product Revenue in H1 is expected to be c. GBP19m versus the
previous half year at GBP20.8m, with an adjusted EBITDA (post
IFRS-16) loss of c. GBP1.5m. The period was impacted by the
continuing challenging retail trading environment and softer
trading during the summer months, consistent with the broader
retail sector.
o Own digital platform sales declined c. 9% YoY, c. 12% CCY,
primarily driven by the previously flagged inflation in marketing
costs and, as a result, lower than planned spend.
o Digital Partner revenue was lower, as expected, as the
business manages this channel with a focus on improved
profitability.
o Trading in our retail stores is starting to improve,
delivering c. 20% YoY growth in the period, but still remains
behind pre-pandemic levels. Our retail stores are and always have
been a very small part of our overall business
-- Gross Sales and Basket sizes increased YoY but as returns
rates reverted to pre-pandemic levels, net sales were impacted.
Despite this increase we are not seeing returns rates across our
markets exceed pre-pandemic levels, unlike many other ecommerce
retailers. We believe this is due to our niche customer
demographic, the needs-based nature of our product and carefully
balanced promotion and pricing.
-- Gross margin improved during the period as we carefully
balanced a higher promotional stance with April's price
increases.
-- Inflation in Customer Acquisition Cost ('CAC') has reduced
throughout Q2 at c. +43% YoY, down from the previously reported c.
+60% in Q1. We have started to execute our strategy to further
diversify our marketing channels and are optimistic that these
actions will deliver further improvement in CAC; however it is too
early to quantify timelines or magnitude.
-- Net debt at the end of the period was c. GBP3.5m, with cash
of GBP3.3m and RCF headroom of GBP0.5m. Net debt position is
expected to improve by the end of the second half in line with
stock unwind.
-- Stock levels are expected to return to normal in the next 12
months and, with the high continuity mix of our product, we expect
to be able to achieve this whilst continuing to maintain or improve
gross margin YoY.
Current trading and outlook
The summer months have been particularly challenging, as they
have been across the entire retail sector. However, a number of
KPIs have improved through the period as we have executed on our
stated plans to strengthen the business. The start of the
Autumn/Winter season was particularly encouraging but more recent
trading has been weaker, again, in line with the broader sector. We
expect volatility in trading to continue throughout FY23 but
believe H2 will be an improvement on H1 as we start to annualise
against normalised returns rates and higher marketing costs and
take benefit from seasonally higher basket sizes and lower return
rates. As a result, we expect H2 to be profitable on a post-IFRS16
Adjusted EBITDA basis. However, we are mindful of the challenging
UK economic environment and the impact on consumer confidence and
disposable incomes.
David N Williams, CEO of Seraphine said :
"Along with many retailers, the summer months were challenging
for Seraphine. The continued pressure on marketing costs and weak
consumer sentiment, coupled with our own strategic focus on
improving margins to drive future profitability, have resulted in a
decline in sales over the period.
"An encouraging start to our Autumn/Winter season has been
followed by more recent weaker trading. We have observed a
declining trend in CAC inflation through the period, with an
expectation that our strategic rebalancing of marketing investment
will lead to further improvement in the medium term. Our outlook is
for the second half to be better than the first given the extremely
weak summer period and softer forward comparatives, although we
expect performance trends to remain highly volatile
throughout."
The Board will provide a further update in the Group's Interim
Results which are expected to be published in December 2022.
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END
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