In The Style is launching a strategic review of the business after rising costs and shopper uncertainty resulted in an 11% fall in first-half revenues, and a pre-tax loss.
The social influencer-driven business has appointed Lincoln International to help it with a process that may – or may not – lead to a sale of some or all of its business and assets.
In the meantime, In The Style, which grew quickly during the Covid-19 pandemic as shoppers turned online to buy and to social influencers for inspiration, says it’s focusing on profitability over sales growth, and aims to move to a stockless approach to selling to partners after a period in which stock levels and fixed costs both at the business and at its partners rose during the pandemic – but sales fell as consumer confidence weakened.
In The Style has reported a record Black Friday fortnight in the second half of its year, with gross order values 6% up on last year, and average order values up by 12%. But it says that consumer sentiment remains uncertain, and it now expects direct-to-consumer revenues to remain flat compared to last year. At the same time costs are rising as a result of inflation.
Half-year figures
In The Style today reports revenues of £26.6m in the six months to September 30 2022. That’s 11% down on the same time last year. Direct-to-consumer sales of £22.9m were 1% down on the previous year – and 186% up on the same period in pre-pandemic 2019 – while wholesale sales of £3.7m were 45% down. That partly reflects the ending of an in-store trial that had been running through the last financial year.
Active customer numbers grew by 17% to 523m, total orders grew by 2% to 841m, while conversion rates improved by 0.29 percentage points to 3.36%. But average order values fell by 5% to £49.89, from £52.75 last time and order frequency by 13% to 1.61 purchases. Costs rose at the same time.
At the bottom line, the retailer moved into the red, posting a pre-tax loss of £3.1m – down from a £890k pre-tax profit a year earlier.
Profit-focused strategy
“We recognise that our success through this difficult period depends not on our ability to predict the future but rather how we adapt to a changing environment,” In The Style says in today’s statement. “With consumer demand and margins under pressure, our focus right now is firmly on driving profitable sales and prudent working capital management, rather than simply pursuing top-line growth.”
During the first half of the year the retailer launched 72 collections with 19 influencers and further engaged with customers through more than 140 micro-influencers with a combined reach of more than 2.8m followers. It also launched its FITS own-brand range of wardrobe staples, which currently includes more than 160 items, and moved to a larger warehouse to give it the capacity for expansion. A smaller technology team is now focused on app development and the stability of the back-end product and merchandising system in order to improve launch and browse capability. It has focused on cost control, restructuring its marketing and product teams around effectiveness at a lower cost.
Adam Frisby, founder and chief brand officer of In The Style Group – who is to return to the role of chief executive following the departure of incumbent Sam Perkins at the end of the year – says: “We have made important progress against our strategic priorities during the first six months of the year as we look to evolve our business and re-engineer our economic model. Highlights have included moving our warehouse operations, restructuring the way in which our teams work and, most encouragingly, launching FITS to a very positive customer reception.
“Our DTC channel delivered a robust performance in the current economic environment and the Group’s core operational metrics have remained solid, with gains in engagement levels and the customer base that were made through the pandemic period being maintained which provides a strong platform for future growth.
“We expect trading conditions to be challenging in the second-half. We will continue to focus on cost control and profitability, and we look forward to delivering further strategic progress over the remainder of the financial year. We remain very excited about the long-term potential of the group.”
In The Style is a Top150 retailer in RXUK Top500 research.
Corrected March 7 2023: comparative pre-tax profit figure of £890m to £890k.
