Koovs trading improves, company gets additional funding
London-listed Koovs, the fast fashion e-tailer that targets the Indian youth market, had good news on Tuesday as it updated on its trading performance in the year to the end of March and also gave us some detail around further funding.
The company’s trading update was headlined “Positive momentum and growth resumed,” which was certainly encouraging after the company has been through quite a bruising period.
It said that its gross order value (GOV) stood at £12.8 million in the period, which was £2 million less than the previous 12-month period. But in the second half, there was a clear improvement as GOV reached £8 million, higher than the £6.9 million of a year earlier.
Its trading margin also increased to 18% from 14% in the prior year and its web traffic was up 50% at 75.9 million visits, while its social media base has increased to 2.7 million followers.
The company said that “over the last 18 months, the board has demonstrated its experience and expertise, taking the decisions necessary to protect the brand and to conserve resources during a period of turmoil caused by demonetisation and the implementation of Goods and Services Tax (GST).”
These decisions had included reducing marketing costs and stock levels, but the business “has now emerged from this period and is well positioned to deliver on its growth strategy,” it said.
And it added that further evidence of its recovery was seen in the final quarter of its financial year when GOV rose by 67% year-on-year to £4.4 million.
One of the biggest issues that has faced it in the last couple of years has been having enough cash to fund its operations and it had news on that front on Tuesday as well.
It has reached a binding agreement, subject to shareholder approval, with Future Lifestyle Fashions Limited (FLFL), part of Future Group, with FLFL to invest the balance of additional funding of approximately £10.5 million into the company, “the proceeds of which will be used to support Koovs' growth strategy.”
FLFL operates over 400 stores in India with over six million square feet of retail space. It owns and markets 30 fashion labels of its own through branded stores, department stores and multi-brand outlets, including its own Central and Brand Factory chains.
The company said the strategic partnership with FLFL represents a “transformational deal for Koovs, which is expected to deliver synergies across the value chain from manufacturing and distribution to market reach, marketing and customer engagement.”
A number of key projects and activities are already under way as part of the partnership between FLFL and Koovs, including technology, concessions, photo studio services, and curated FLFL products being sold via the website.
Koovs chairman Lord Waheed Alli said of Tuesday’s news: "Koovs has been through challenging times over the last couple of years. [CEO] Mary [Turner] and the team have taken the decisive actions necessary to help navigate through these disruptions, further highlighting the resilience of our business model and the strength of the team. With the support of our shareholders, the team is now driving the business forward and we are confident we can achieve strong growth this financial year.”
Turner herself added: "The external factors that disrupted our business are now firmly behind us. We have deployed the funds raised in 2018 to resume marketing activities and expand the product range - this was the driving force behind the growth in sales and trading margin experienced in the second half of the year. We are now building on this positive momentum and are starting to deliver the growth we always believed the company is capable of.”
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