Koovs comes through tough year, says Q1 trading is better
London-based Koovs, the fast fashion e-tailer that largely targets the Indian market, has had plenty of challenges to deal with in the last few years, but its recent funding injection and improvements in trading seem to have put it back on track.
On Wednesday, the company issued a Q1 update along with its preliminary results for the year ended March 31 and talked of a 104% trading improvement (to £4.82m) for the current first quarter compared to a year ago.
That's undeniably good news as the full-year results show just how tough things were for the company. You only have to look at the financial ‘highlights’ of the year to see that.
In FY2019, although wholesale revenue rose year-on-year to INR590m/£6.9m from INR543m/£6.4m, gross order value (GOV) fell to INR1.1bn/£12.8m from INR1.26bn/£14.8m. And its net sales dropped to INR691m/£7.5m from INR817m/£9.6m, while the conversion rate was down to 1.1% from 1.4%.
The pre-tax loss rose to INR1.423bn/£15.5m from INR1.3bn/£13.9m, but at least the adjusted EBITDA loss narrowed to £12.9m from £13.9m and the trading margin increased to 18% from 14%. Web traffic also rose to 75.9m from 65.9m and the company raised a total of £22.1m in new funds, much of it from a strategic deal struck with Future Lifestyle Fashion Limited (FLFL).
The company said its turnaround really began in the January to March period (FY2019’s Q4) and it has continued since then.
CEO Mary Turner hailed the “success in the last three months of FY2019” and said “we expect to return to significant full year growth in FY2020 with a focus on securing a continued improvement in trading margins. The recent funding secured from FLFL will fuel our ability to continue to invest in marketing to increase traffic levels, together with an expansion in our product offering, designed to lift conversion rates.”
Chairman Lord Waheed Alli added: “Koovs is firmly back on track. The last two years have been especially challenging. The disruptions in India caused by de-monetisation and the introduction of the Goods and Sales Tax (GST) in July 2017 were a significant brake on [our] online retail activity levels throughout FY18 and into the first half of FY19. Despite a good recovery in gross order value and trading margin in the second half of the year, the results for FY19 have reflected these regulatory challenges.”
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