Seraphine faces tough year as costs surge

Maternity and nursing wear brand Seraphine Group issued its maiden annual results as a listed company on Monday. The numbers for the 12 months ended 3 April came “against the backdrop of an extremely challenging year for the retail sector” and contained a mix of good news and bad.

On the plus side, product revenue rose 28.8% to £44 million, up 33% currency-neutral. Revenue from its own digital platform rose 21.2% on a reported basis to £37 million and was up 83.2% at its digital partners, reaching £4.4 million. Its own retail store revenue rose 111.5% to hit £2.6 million. Product gross profit was £27.8 million, a 23.6% increase.

The conversion rate rose to 3% from 2.8%, total orders rose 19.5% and the basket value during the year was up 6.5%.

But adjusted EBITDA fell 58.6% to £2.6 million, and the operating loss was a massive £31.9 million – much bigger than the £4.9 million loss of a year earlier.

It said the adjusted EBITDA figure was below previously guided expectations due to “a number of factors including lower than expected product revenue growth, increased supply chain costs, increased marketing costs and unexpected costs of entering new markets”.

But the firm continues to expand. In the last year it has onboarded two new partners — Zalando and Next — and has launched its own digital platform into three new markets, Canada, Switzerland and the Netherlands. Its new athleisure range also launched and it added to its outerwear and occasion wear lines. It has another new category launch planned for the autumn season.

But the rough times are clear from the fact that it’s now “evaluating the performance of our portfolio of seven physical retail stores on a store by store, market by market basis to optimise performance and value”.

That comes as the firm said that it’s “continuing to experience significant inflation in marketing costs — having to spend 33% more to maintain prior year product revenue levels”.

It has updated its guidance to between 0% and 15% product revenue growth, but it expects margin to improve throughout the range.

CEO David Williams said: “It has been a challenging year, both externally for the consumer sector as a whole and internally for the group. We have taken decisive action to respond to these challenges. Internally, we have strengthened the team and our new CFO Lee Williams has made good progress on delivering improvements to our finance function, systems and processes. We have also been nimble in responding to external challenges, reallocating marketing spend and conducting a strategic re-pricing to optimise value.

“Despite these challenges, we have delivered significant product revenue growth, showing the strength of our strategy, brand and our customer proposition. Additionally, all non-financial KPIs have grown — customers are visiting our websites more and when they are, they are buying more, which illustrates the strength of Seraphine's unique products.

“There is no doubt that our first year as a listed company has been challenging — but I am confident that, coupled with our strong business fundamentals, we now have the team, the structure and the functions in place to focus on delivering profitable growth.”

Seraphine faces tough year as costs surge

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