Seraphine issues new profit guidance as it's "not immune" to sector-wide pressures
Seraphine has confirmed that challenging marketing conditions including Russia's invasion of Ukraine, as well as the rising costs of living, have impacted its profit guidance in a trading update for the year ending 3 April 2022.
The digitally-led maternity and nursing wear brand has lowered its full year 2022 sales expectations to £44.1 million with an adjusted EBITDA of £3 million. This further lowers expectations after the brand's previous profit warning in February, where it had put EBITDA expectations for the year at £4.5 million.
Seraphine said that it had "not been immune" to sector-wide pressures, including the war in Ukraine which have weakened consumer sentiment across Europe, as well as a notable inflation in distribution costs and customer acquisition marketing costs, which increased by 25% year-on-year. Further items such as unreconciled customer refunds and stock adjustments had also impacted the guidance.
Results for the full year 2022:
- 33% year-on-year revenue growth on a constant currency basis
- 52% growth in North America, where it sees further opportunities for expansion
- Sales growth reported in its new markets Canada, Switzerland and the Netherlands
David N. Williams, CEO of Seraphine, said: "Despite the evident challenges faced by the industry and consumers, the Group has seen strong revenue growth for the full year. This, combined with excellent progress in North America and expansion into a number of important new markets, reflects the underlying strength of the business."
"Whilst we are disappointed that a combination of internal and external factors has affected the outturn for the year and expect consumer sentiment to remain subdued in the short term, we are confident in the strong underlying fundamentals of the business and our ability to scale up and deliver growth in the medium term. We will also benefit from the steps we have taken to strengthen our executive and operational management capability across the team."
For the full year 2023 Seraphine has set its forecasts to deliver sales growth of 10-20% and an improvement in EBITDA margin to 8-9%. This shows a further reduction from its previous profit guidance announcement in February, where the brand shared an expected sales growth of 25-30% in 2023.
Seraphine has further announced actions it intends to take to strengthen the business, building on its announcement from February that it was closing its Madison Avenue retail store in New York and change the lease of its Soho store. It is now also planning to implement a re-pricing model which will protect entry level product pricing while increasing more premium items that have traditionally delivered exceptional value. The maternity brand further highlighted its investment in innovative product design and in-house creative marketing capabilities to drive consumer demand.