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Seraphine focuses on profitability over sales growth as first-half sales fall and pre-tax losses narrow

Image: screenshot of Seraphine.com

Image: screenshot of Seraphine.com

Seraphine says it is focusing on profitability ahead of sales growth in the face of “significant inflation” in marketing costs and a challenging economy – and as it reports falling first-half sales and narrowing pre-tax losses. 

The retail brand, which sells clothes and accessories for pregnancy and beyond, has seen shoppers return in store, post-pandemic, although footfall has yet to recover to pre-Covid-19 levels. Online sales have fallen at the same time from pandemic peaks, both on its own website and via partner websites. It is now reevaluating its partnership with Zalando in order to improve the contribution of the channel and has hired a performance marketing director to focus on marketing spend metrics. 

Half-year figures

The update comes as Seraphine today reports revenues of £19.7m in the 26 weeks to October 2 2022. That’s 9.3% down on the £21.8m it reported a year earlier. 

Pre-tax losses of £3.9m have narrowed from losses of £7.4m a year earlier. Operating costs rose by 17.7% over the period. The retail brand has agreed revised debt covenants with its lender. 

Seraphine chief executive David Williams says: “The period was challenging, as seen across the broader retail sector, with the combined headwinds of the macro-economic backdrop and inflation in marketing costs.

“Despite these challenges we are pleased to report improvement in some key operational KPIs, in line with our renewed focus on profitability and the actions we have taken to streamline and sharpen our internal business functions. We have achieved higher basket sizes and improved gross product margin versus the previous year, reflecting our resilient demographic and careful balancing of promotion and price increases.

“We remain focused on our strategy of bringing our innovative and stylish product to more customers worldwide and have been encouraged by the growth of our new markets. In the short term, we will pause the rollout of further international markets and focus on product innovation and improving our service proposition in existing markets. We have some exciting new products planned for the months ahead – including a highly innovative baby carrier – and with a niche yet loyal customer demographic, whose custom is often non-discretionary, we are confident that we are building a strong platform for the future.”

How shoppers are buying across channels

The maternity-wear multichannel retailer says that revenues have grown in its stores in France, the UK and the US, following their reopening in the wake of Covid-19 restrictions. As yet, however, sales volumes are still below where they were before the pandemic – and have weakened further in the first nine weeks of the second half. 

As more shoppers go into stores, online product sales have fallen back at the same time, declining by 8.8% to £16.1m on its own website, and by 34.2% to £1.2m on third-party partner websites. During this year, says Seraphine, its focus has been on maintaining profitability ahead of revenue growth – so that it has needed to assess the best combination of products, pricing and promotion both by territory and by partner. It is reassessing its partnership with Zalando in order to improve the contribution of the channel. 

Traffic fell by 3.6% to 7.4m, while basket values grew by 13.5% to £153. Conversion rates fell to 2.6% from 2.9% previously. The retailer says that returns rates have increased, but that they are no greater than they were before the pandemic. It has now appointed a performance marketing director who will focus on marketing spend metrics. 

Product sales grew in its US market (+8.5% to £6.6m) but fell in the UK (-11.7% to £4.3m), the EU (-18.8% to £7.2m) and the rest of the world (-18.8% to £0.8m). 

Seraphine is a Top350 retailer in RXUK Top500 research

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