Shares of Salford-based fashion firm In The Style fell as much as 18% on Friday after it published an AGM trading update for April to August 2021 saying that its profitability will be hit by “freight and supply chain disruption” and “increased freight costs and disruption to the timing of shipments.”
The firm, which had a successful IPO in March, 2021, also reported an increased rate of returns during the period.
The company’s AGM statement read: “In The Style has continued to deliver strong sales growth with group revenue during the period up 45% year on year and e-commerce gross order value almost 50% ahead.
“This performance has been driven by the increasing profile and awareness of In The Style’s differentiated brand; the continued expansion of the group’s influencer collaboration model including the launch of nine new partnerships during the period; and increased customer demand reflecting the return of social events during the summer.
“The group’s primary operational KPIs of website traffic, customer conversion, average order value, and order frequency all showed strong improvements against the prior year.
“In The Style’s proprietary App continued to deliver strong levels of consumer engagement, with App sales increasing to 62% of total e-commerce sales compared to 53% for the same period in the prior year.
“The group’s new strategic wholesale partnerships, including the successful launch in 100 ASDA stores in May, supported good levels of customer engagement and resulted in wholesale sales significantly increasing by in excess of 200% year on year.
“As anticipated, over the period the company has seen a shift in demand towards occasionwear, which typically carries a higher rate of returns than the leisurewear categories that dominated the sales mix during the prior year.
“In addition, the faster than anticipated progress on growing sales of the group’s more inclusive size ranges has resulted in an increase in the rate of returns.
“As a result, net e-commerce sales for the period (excluding VAT and post returns) were 25% ahead of the prior year.
“The group continues to invest in its senior leadership team to support the delivery of In The Style’s long term growth plans with several hires made during the period across product, sourcing, technology, brand, HR, finance and CSR.
“Consistent with many other UK retailers, In The Style has not been immune to the impact of the widely documented freight and supply chain disruption during recent months.
“Whilst the group has sought to utilise the most efficient channels wherever possible to ship product, increased freight costs and disruption to the timing of shipments are expected to remain for at least the remainder of the current financial year which, in combination with the increased returns rate in the period, will impact the group’s profitability.
“Despite this near-to-medium-term industry-wide disruption, underpinned by its innovative influencer collaboration model and differentiated, inclusive brand, In The Style remains in very well positioned to continue its strong growth trajectory and deliver its exciting long-term potential.”
Adam Frisby, CEO and Founder of In The Style, said: “We are pleased with the strong sales momentum achieved during the financial year to date.
“This momentum has been supported by increasing consumer awareness of In The Style and our clear brand mission to empower customers to be brave, embrace body confidence and, most of all, love themselves for who they are.
“Central to our growth is our differentiated influencer collaboration model that creates strong customer connections, drives efficient customer acquisition, and gives us exposure to a broad range of customers.
“During the period we continued to add exciting new influencer partnerships as well as launching a number of successful collections.
“We continue to invest in our team and infrastructure to support our long-term growth, and despite the widely-publicised external headwinds expected to continue to impact across the retail industry over the coming months, we remain very well positioned to continue to grow In The Style and achieve the brand’s exciting potential.”