Sosandar Share Discussion Threads

[2breakout] 10/10/2018 15:37

Reality setting in? This whole business is based on hope and trust, so early stage are they still selling from their front room? 52% returns, if i'm buying something i don't want something that some sweatbox has put on already. What happens if Paul Scott starts selling his 2 million shares when 10k moves the price most of the time?

[bigboyo] 10/10/2018 15:15

The rate of rturns is worrying. The assertion by some that 52% is normal is plain wrong.

The logistics and cost of processing returns and managing inventory is not to be underestimated.

The crucial period of trading is coming up, and if 52% of December orders are returned and go into the post Xmas sales at discount, then the figures will probably not look so pretty even with stellar topline growth.

hxxps://internetretailing.net/views/views/guest-comment-keeping-up-with-asos-try-before-you-buy-places-a-strategic-focus-on-warehouse-operations

And The Telegraph reports that ASOS has returns at 25% of sales and they positively encourage try-it-on-in-the-bedroom (the stock that is !)

[bigboyo] 10/10/2018 15:04

There is a real issue going on with Try Before You Buy.

The logistics and cost of processing returns, together with putting the stock back out for sale again to the next customer.



"Roughly a quarter of all Asos purchases are returned by customers, ... The Telegraph link has a stat showing the rate for ASOS returns at 25%.

Asos runs a slick operation and they can turn around returns fast. We need to see evidence of the turnaround for returns at SOS and also the impact of extra stock needed.

As an example, say SOS ordered 1000 pieces of an item , and all were sold within 30 days.

It has to decide whether to order more, await returns , how to alert customers who had wanted to buy this item but were told it was sold out WHEN and IF it comes back into stock with returns or more fresh stock.

The logistics in expanding fast are frightening, and whilst the top line sales growth looks fantastic, we need to see how much the advertising cost to get these extra sales, what impact the returns processing has taken, and how much cash is being absorbed in buying stock in quantities which ensures suffcient satisfaction WHILST ensuring that returns are kwpt at manageable rates.

The Returns figure is the snake in this trading update and its importance should not be underestimated.

hxxps://internetretailing.net/views/views/guest-comment-keeping-up-with-asos-try-before-you-buy-places-a-strategic-focus-on-warehouse-operations

[rathean] 10/10/2018 13:56

Huge percentage returns so halve the revenue number, and given the implied cash burn the cost per customer acquisition remains very high. Valuation just daft, anyone can throw money at marketing to buy revenue. Still remain to be convinced that this can scale up imo dyor ofc.

[kingharold] 10/10/2018 11:55

opod: Who cares?

[opodio] 10/10/2018 11:46

Sosandar - bonkers valuation of the week!
Making the most of a crazy market
Sosandar (AIM:SOS), the online women's fashion brand, has made huge strides since arriving on AIM as a virtual start-up at the end of 2017, but the valuation looks fairly ludicrous to us

[ramridge] 10/10/2018 11:07

ironmc - I think you have nailed it. thanks.

[ironmc] 10/10/2018 10:27

ramridge, maybe the difference is VAT.

If you take VAT off revenue of £2.2m you get £1.85m

[croasdalelfc] 10/10/2018 10:16

Last for Q revenue : £411k £492k £851k £990k a crucial quarter coming up . Xmas etc

[toyin] 10/10/2018 10:09

ramridge, no problem.

[ramridge] 10/10/2018 10:07

toyin - thanks. yes it is £1.84m OK so the difference is about 20%.
Maybe this is within the bounds of approximations?.
With BOO and ASOS the numbers matched within 3%.

[toyin] 10/10/2018 09:50

ramridge is revenue not £1.84m?

[ramridge] 10/10/2018 09:42

Can someone please explain this apparent anomaly. From today's TU,

- average order value (aov) = £105
- total number of orders in the period = 43,979
- returns rate 52%

This implies revenues in the period roughly = 105 x 43979 x 0.48 = £2.2m

But they are reporting HY revenues £1.2m . Big difference.

I did a similar calculation with BOO and came pretty close to their reported revenues.

So where am I going wrong with SOS?

[yump] 10/10/2018 08:47

They had £4.6mln cash at year end - March 2018. Presumably the placing is for working capital etc. due to expansion.

Raising money, is what the market is for after all. Some businesses float with a profitable working business model, some don't.

Whether the share price continues upwards just depends on how much tolerance 'the market' has for an unproven business model. Or rather, how long the market will wait and looking back to 2000, that just depends on sentiment, nothing else.

I say unproven, because the acid test is profitability. Banks won't keep lending money for years, but the market often does.

[plasybryn] 10/10/2018 08:34

Wow nice response to a great trading update and the best quarter to come - Xmas. Looks well managed. Working 7 days a week to make us rich. Thanks

[montynj] 10/10/2018 08:27

Discounted placing not good..great trading update...however, with global equity markets teetering on the brink with rising bond yields squeezing the relative attractiveness of equities, several small cap indices are breaking down. Small caps are like the canary in the coal mine. I think these shares and others have the potential to significantly overshoot on the downside in a bear market...SOS will 100% be one to buy when panic sets in. GLA

[daijavu] 10/10/2018 08:23

A nice rise this morning. It looks like normal service has resumed

[onjohn] 10/10/2018 08:15

great post michael mouse

[montynj] 10/10/2018 08:11

Discounted placing not good..great trading update...however, with global equity markets teetering on the brink with rising bond yields squeezing the relative attractiveness of equities, several small cap indices are breaking down. Small caps are like the canary in the coal mine. I think these shares and others have the potential to significantly overshoot on the downside in a bear market...SOS will 100% be one to buy when panic sets in. GLA

[mauricemonkey] 10/10/2018 08:05

We get the costs and the size of the loss in the half year results statement