This webinar is being recorded. I now hand over to Julie Lavington and Ali Hall, Co-CEOs, and Steve Dilks, CFO. Julie, over to you.
Thank you, Tamsin. Good morning, everyone, and welcome to the call. Here with me today is Ali Hall, my Co-CEO, and our Chief Financial Officer, Steve Dilks. As with previous trading update calls, we'll be providing a short summary of the update, followed by a Q&A session ending at 9:00 A.M. We are extremely pleased to be reporting on what has been a milestone year for Sosandar, with revenue of GBP 42.5 million, which is 44% up versus last year. We have delivered our first full year of profitability, with PBT expected to be at least GBP 1.6 million, a substantial positive swing of GBP 2.2 million versus a GBP 0.6 million loss in FY 2022. We are incredibly proud of the business that we've built.
Sosandar has grown from a true start-up business just six years ago to a brand which is delivering multimillion-pound revenue and is profitable. This growth has been delivered against a backdrop of some of the most challenging macroeconomic times ever experienced. Our sustained performance is testament to how well our product resonates with our customers. In just six years, we've built one of the fastest-growing fashion brands in the U.K., sold through the country's biggest retailers, which now includes Sainsbury's, which we announced in January. We started trading with Sainsbury's online in March. We will launch in 10 of their largest flagship stores in August, alongside an elite collection of brands. This move to be an omni-channel business opens even more opportunities to service customers in both the U.K. and international markets, both on and offline.
On that note, I'll hand over to Ali to talk more about the exciting developments for the year ahead.
Thanks, Julie. As Julie mentioned, this has been a pivotal year for Sosandar, and our huge progress highlights the effectiveness of our strategy, the appeal of our diverse product range to our target audience, and the growing awareness of our brand. We're incredibly excited about the many opportunities that we have for the year ahead, which is why we brought investment forward in the latter part of FY 2023. Firstly, we've further invested in our senior team with the hiring of some new pivotal roles, including an e-commerce director, international commercial director, and head of operations. These hires are particularly important to have in place in order to execute the next stage of our growth.
To ensure that our customers can engage with the brand through as many channels as possible, and our technology is constantly evolving, we're in the process of developing a mobile app, which will be launched in Q2 FY 2024. In addition, we have also invested in personalization and segmentation tools for Sosandar.com, both of which will further underpin customer acquisition, retention, order frequency, and AOV. Now to move on to our international strategy. As we've talked about previously, we've been exploring and researching opportunities. Whilst in this phase, we've always remained conscious that any move to serve our customers internationally would have to be done in a cost-effective way with minimal risk.
We are pleased to announce today that we've signed an agreement with Global-e, the world's leading platform to enable and accelerate global direct to consumer cross-border e-commerce that will allow us to transact and fulfill orders worldwide in a cost-effective manner. This is expected to go live in Q1 FY 2024 and is an important part in the next stage of our development. We're also in active dialogue with a number of potential international third-party partners, and it is clear that Sosandar will be a brand in demand overseas. We expect to be able to provide more details on this in the coming months. All three of these areas of investment are vital parts of our next stage of development as we continue to execute on our growth strategy and build on the strong foundations that have been laid over the past six years.
I'll now pass over to Steve to pick out some highlights on the financial side.
Thanks, Ali. Good morning, everybody. As Julie has said, we are very pleased to report net revenue of GBP 42.5 million for the year ending the 31st of March, 2023, which is a 44% increase against the prior year. We have also delivered our first full year of profitability and expect to report PBT of at least GBP 1.6 million, which is a substantial positive swing of GBP 2.2 million from the GBP 0.6 million loss in FY 2022. The variance to PBT market consensus is predominantly people costs that we originally planned to be in FY 2024. We were fortunate to find the right people in the latter part of FY 2023, which will enable us to capitalize on the opportunities quicker.
Pleasingly, our gross margin was maintained at 56.1%, in particular, given the growth in revenue from our lower margin wholesale channel over the year. Every single KPI on our own site has improved year on year, with a couple of standouts being conversion, which has increased to 4.1% versus 3.9% last year, and our average order value, which is up 8% at GBP 97. Trading with our long-standing third-party partners, John Lewis, Marks & Spencer, Next, The Very Group, and JD Williams, continues to be a huge success. In order to meet the demand that is being generated through this channel, we increased the amount of stock allocated to each partner throughout the year.
Over the last 12 months, we have continued to invest and expand our unique product range. We are thrilled to say that every single product category experienced growth during FY 2023. The spring season has started really well, with revenue for the month of March being 32% up on the previous year. As of the 31st of March 2023, we have a net cash position of GBP 10.5 million, which follows the GBP 5.5 million equity raise that we did in February 2023. We are in a very strong position to maximize the wealth of opportunities that we have ahead of us. FY 2023 has been a true milestone year for Sosandar. As we enter FY 2024, we do so an even stronger, more diversified, and scalable company. We're absolutely delighted with the progress that has been made so far.
However, we remain vigilant of the difficult external environment that still faces us. The strength of our people, our product, and infrastructure gives us every confidence in our ability to achieve long-term sustainable growth and ever greater value for shareholders. Looking ahead to FY 2024, we are investing further in our business to take us on the next stage of our development and to build the infrastructure to serve our customers internationally. To summarize, we have delivered a financial performance well ahead of the prior year. We have a clear growth strategy in place and a proven ability to execute our plan. This gives us confidence that we will achieve what we have set out for in FY 2024 and beyond, as we continue to move forward on our journey to make Sosandar one of the largest womenswear brands globally.
If you have any questions, we'll be happy to take those now.
Thank you very much, Steve. To ask your question, click on the Q&A button and type your question in. We've got a question here from David Reynolds from Davy: Can you provide a little more color on Global-e? And if possible, what are the building blocks of the growth initiative?
We see globally, David, as a brilliant way for Sosandar to enter international markets. It will enable us to deliver product globally, directly to consumers. The Global-e platform have created a mechanism in which they can localize the payment gateway solutions offered in each market, and they also manage the logistics side of moving the goods cross-border, which was particularly more challenging post-Brexit, of course. That enables customers to receive their goods. It deals with duty and local VAT issues, as well as the return of leg. We see Global-e as a start point. It's not the end goal.
It's part of a process of going internationally, driving brand awareness, being able to deliver goods into consumers internationally, but it's a great pathway in which we can start to engage with third parties as well, because we end up brand presence in market that can drive penetration across an omni-channel route to market.
Thank you very much. A question from Alan Charlton. Congratulations on the performance in full year 2023 and also on the raise. The second half particularly does look like an exceptional third-party performance, but with own site orders and conversion lower than half one. Is there any reason for that? For example, the Royal Mail strikes, et cetera.
Hi, Alan, thanks for your question. The Royal Mail strikes, yes, will have had a small impact, but actually we feel like we navigated that process really well. Of course, October and November for us are much more pivotal months than December are. The growth rate did slow in half two, but that was absolutely in line with our expectation because the comparatives year-on-year for the second half in the prior year were much stronger, post an investment or greater investment in stock than we did in the previous year. The second half was absolutely in line with where we expected it to be on both our own site and with third parties. Both are in growth and both are continuing to go from strength to strength. We're perfectly pleased with the performance across the board.
Tremendous. Thank you. A follow-up question from Alan. Now you've crossed the Rubicon in going into stores and becoming omni-channel. Is the opportunity to go into stores with the third parties who already know and love you, so John Lewis, Marks & Spencer, Next, et cetera?
The opportunity to go into store has really been discussed with many of our third parties right from the beginning when we started trading with them. That excludes Next because they don't Next currently sell brands in store. Up until this point, we made the decision not to go into store because clearly we were trading through very volatile times with COVID and stores were opening and closing. It remains certainly a possibility to go into store at some point with our existing third-party partners. What we're very keen to do is execute Sainsbury's first and get that experience with Sainsbury's, but we are very much open to working in store as well with our existing third-party partners.
I think it's also worth saying that many of the conversations that we're having with overseas third-party partners, that is both for in store and online. Having made the move to start selling in store, it's very much opening further opportunities internationally because the potential partners that we're talking to see us not just as a pure play brand, but as an omni-channel brand.
Thank you very much. Paul Jones asks: Do you see the main partner opportunities internationally now rather than with adding further domestic players?
I think with the U.K., we're with, you know, the biggest retailers in the U.K., and we're really happy with our partners there in the U.K. As Steve just mentioned, there are other opportunities within the partners that we've got in the U.K. Yes, our focus now is to look at international, and we're having conversations with partners across all territories. It's really just about us selecting the right potential partners as we've done in the U.K., which is about, you know, getting partners with the right commercials, the right logistics, and the right way of showcasing our brand, and it's for us to make the same decisions that we made with the U.K. brands that we partner with and make sure they're the right partners for Sosandar .
Great. Just a reminder, we've got one more question, but if anyone has a question, click on the Q&A button and type your question. Mohit Gajaria asks: What's the level of CapEx anticipated for full year 2024?
Pretty low. We are doing a relatively modest system change in the back-office systems that we use, which is our ERP system. Beyond that, there isn't significant CapEx requirement in the business. Everything is largely OpEx-based here. A little bit of software development, but beyond that, fairly minimal other than the routine stuff that we do for our staff, et cetera. Very little CapEx, relatively speaking.
Thank you very much. Alan Charlton has another question. Clearly, last year had margin headwinds, several of which seem to be reversing now, lower freight, currency, cotton, et cetera. Are you seeing that come through?
We are, Alan. When you look at the margins that we've reported, in the second half, they were really strong, underpinned by some of the points that you said, but also some of the things that we're doing that are internalized rather than external, which is around maximizing and improving the way that we move goods from our suppliers into the U.K., et cetera, et cetera. As we move forward, we think there's still margin gains to be had, not only because of what's external, but also the way we operate as well. We've obviously got scale, which we're still relatively small, in terms of where we're heading. We've got gains in terms of supply, as well as just improving the overall supply chain further, to drive efficiencies that will come through in the margin.
The only word of caution around our gross margins is that as we grow the proportionality of our wholesale business, which is lower margin at the gross level, then we will start to see some erosion, I suppose, on the reported number, but we will narrate that appropriately at the relevant times.
Thank you very much. Paul Jones asks: How much spare capacity is there to service additional partners without adding additional people?
I think we would say that it's not really about people in terms of serving additional partners. It's much more about stock, so which is obviously why we did the fundraise in back at the beginning of February because it's really just the stock that you need in order to serve the additional partners. We don't see a big uptick, or certainly not. It's not gonna be in line with the number of partners and the way that the business is growing. Where we have employed an additional person, as we've highlighted in the RNS, is an international commercial director. This is taken from...
We've got so many interested parties overseas, what we've learned from the U.K. is the execution of those, third-party relationships is absolutely fundamental, and you need senior representation overseeing the execution of those, of those relationships. We have, employed an international commercial director, but we don't see huge teams being needed to facilitate more and more third-party partners.
The other thing I would add, Paul, to that question in terms of scalability of the business, one of the beauties of how Sosandar has built its infrastructure is that we work with a third-party logistics provider who can scale as we grow. That's been the case from day one, that we've worked with the same partner, and that can continue to be the case. However big we get, we can continue to be serviced. Secondly, towards the latter end of FY 2023, we onboarded Evri as an additional carrier to get goods to our consumers. We've got further developments coming around the corner in that regard as well.
All of this is around building the capability to service the customers, both, in the home market, but also overseas, as well as giving our customer the choice to use partners that they want to deliver their parcels, rather than being constrained by who we choose. There's a lot of developments that have already taken place and will continue to take place that ensure that as we grow, we can do it in a way that is sustainable, for the longer term.
Thank you very much. Peter Steel asks: How confident are you that your website won't be hacked, and what measures have you taken to prevent this?
We have, both in-house and external provision support that provides lots of cyber-related security to make sure that we are in the best possible position in all regards of not being hacked. You can never say never, but we're confident that we're doing everything possible to maintain the security of the infrastructure, both of our website as well as other parts of the operation. In addition, we do stress tests to try to find problems or loopholes. We're doing everything that I think is reasonable or humanly possible to maintain the security of our, of our systems.
Many thanks. The final question at this stage is: What are the consensus forecasts for 2024, and are your international ambitions region-specific?
The house broker forecast for FY 2024 have remained unchanged. They are revenue of GBP 58 million and PBT of GBP 3.1 million.
Carry on with the second part.
Yeah. Second part was international.
I, I-
Oh, okay. Yeah.
Can take that. In terms of international, at this point, we're not region-specific. We're talking to multiple partners across various territories around the world, and it's really just about finding the right partner that works for us rather than specific territories. We feel that, and we've always believed that Sosandar's proposition would translate across the world, really, and the reaction we're getting from potential partners in multiple territories is proving this.
Thank you very much. A question from Freddy Ahad that asks: The growth rate in new customer orders seems to have reversed by -7% versus last year. Have there been any changes in the client acquisition landscape that can explain this?
I'm not sure what data that's pulling from. The growth rate on new customer orders hasn't reversed. We've grown both new customer orders and repeat customer orders in the year. The marketing mix continues to be tweaked, I suppose, to maximize the outturn of both customer acquisition, but also retention. We're really pleased with that mix, such that the cost of acquisition continues to be really low and managed really effectively. We continue to modify and tweak and make sure that we're getting most biggest bang for our buck in the way that we invest our money, but we're really pleased with both our acquisition and our retention stats in the year.
Tremendous. Thanks very much. That's the end of questions. Julie, do you have any closing remarks?
Just to say thank you all very much for joining us this morning, and we look forward to updating you again, will likely be in July when we do, year-end results.
Thank you very much, Julie, Ali, and Steve, and you all for joining. This is the end of the webinar.