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 (withdrawal) Act 2018. The information is disclosed in accordance with the Company's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
For immediate release
23 February 2022
Seraphine Group plc
("Seraphine" or the "Group")
Seraphine (LON:BUMP), an international digitally-led maternity and nursing wear brand, today provides an update for the second half of the financial year to date.
The Group has experienced strong sales growth in the 17 weeks to 30th January 2022 of 45% (CCY) with North America at 69% (CCY), however February to date has been a soft month across all markets and channels with the retail store trading environment remaining extremely challenging. Management expects ecommerce demand to recover in March, which is traditionally a stronger month due to the launch of the spring summer collection, and to deliver full year revenue marginally below current expectations.
In addition, there have been a number of margin and costs challenges recently identified which means that FY22 Adjusted EBITDA pre-IFRS 16 is now expected to be significantly below current expectations at circa £4.5m.
These challenges include:
· Customer Acquisition Costs (CAC) impacted in February by weaker demand
· An underestimation of the level of sales tax and duties incurred on outbound and returned goods in our new markets of Canada & Switzerland
· Higher than anticipated promotional activity at the end of December and in January to clear the increased mix of seasonal product resulting from the delayed stock issues in the summer, impacting gross margin
· Inflation in warehousing & transport costs since the beginning of the calendar year
Management is taking the following actions to mitigate the above margin and cost challenges:
· Eliminating duty charges on customer returns from non-EU markets via bonded warehousing
· Registration for and collection of sales taxes at checkout in Canada, as already implemented in the US
· Negotiation of a new long-term agreement with our third-party logistics supplier
· Closure of the Madison Avenue retail store and change of the Soho store lease to a turnover based rent (both in New York)
The above actions are expected to have positive impact during FY23.
Looking to FY23, we expect sales growth of 25-30% and EBITDA margins to start to rebuild.
The Group is experiencing no issues with inbound stock, with the mitigating actions taken by management since the summer resulting in the on time delivery of the spring summer collection.
Further to the announcement made on 22 December 2021, we welcome the arrival of our new CFO and Executive Director, Lee Williams, to the Board on 28 February 2022 and will support him in improving our forecasting and financial management information capability. John Bailey, Finance Director, will step down from the Board on the same date and, as previously announced, will remain with Seraphine for sufficient time to ensure a smooth transition.
This announcement has been released by JTC (UK) Limited, Company Secretary on behalf of Seraphine.
For further information, please contact:
Seraphine Group plc
David N Williams, Chief Executive Officer
via FTI Consulting
FTI Consulting (PR adviser to Seraphine)
Rafaella de Freitas
+44 (0)20 3727 1000
Seraphine is an international digitally-led maternity and nursing wear brand with a diverse range of innovative maternity and nursing products serving an under-competed global market.
Seraphine was founded in 2002 with the vision of creating desirable clothes which women would want to wear even if they were not pregnant, and this ethos remains true to this day. The Group has over 18 years' experience designing and developing maternity and nursing wear for women from first trimester to post-partum and nursing products.
The Group has achieved global brand recognition through its rapidly growing digital platform, which in the year to 4 April 2021, contributed to approximately 89% of revenue. The Group currently exports products to customers in over 120 countries globally, with the Group's largest markets being Europe, North America and the UK.