Shares of Salford-based fashion firm In The Style fell as much as 10% on Wednesday after it warned that “industry-wide global supply chain disruption and increased associated costs are expected to continue through at least the second half of the year.”
Despite reporting that its revenue rose 38.8% to £29.8 million in the six months to September 30, 2021, In The Style said profitability has been impacted by the supply chain disruption as well as a higher return rates versus the prior year “in part reflecting sales growth of the group’s more inclusive size ranges …”
First-half profit before tax fell to £890,00 from £1.8 million in H1 of the prior year.
Last month, In The Style announced big changes to its leadership team with Sam Perkins hired from The Very Group as the company’s new CEO from January 17 and chief executive Adam Frisby moving into a new role of chief brand officer.
In its outlook, In The Style said: “Since the end of the period and through the important Black Friday and December trading period so far, the business has continued to perform well with direct-to-consumer sales continuing their strong growth trajectory.
“The business has again capitalised on demand for seasonal products with Christmas pyjama launches via our influencers being a firm customer favourite.
“As anticipated, sales to wholesale partners have been lower than the prior year since the period end reflecting the phasing of orders, however the group remains confident in achieving continued progress through this channel in the second half.
“As previously indicated by the group, industry-wide global supply chain disruption and increased associated costs are expected to continue through at least the second half of the year.
“We continue to actively manage these external challenges as far as is possible and, so far, have successfully amended collection launch timings and deliveries into wholesale partners to minimise disruption.
“Detailed plans are in place to mitigate the longer-term cost impact of these external headwinds through both sourcing and product pricing initiatives.
“We continue to take actions to improve the returns rate, including improving the fitting process.
“Since the period end, return rates have reduced in line with expectations reflecting the seasonal change in the product mix, and we are confident of achieving a lower underlying returns rate over the medium term …”
In The Style founder Adam Frisby said: “In The Style has continued to deliver very strong sales growth and strategic progress during the first half of the financial year.
“The business has continued to build on its exceptional growth in the prior year, despite the reopening of physical retail and lifting of social restrictions during the period, which reflects the strength of our brand and our truly differentiated influencer collaboration model.
“During the period we continued to expand the business with the launches of a number of exciting influencer partnerships, as well as successfully developing the group’s growing wholesale channel through the launch of our partnership with Asda.
“Whilst the global supply chain and freight disruption that has impacted across the industry is expected to persist for at least the remainder of the year, we are pleased to report that the strong sales performance achieved during the first half has continued through Black Friday and into the festive trading period so far.
“With this momentum, coupled with recent investment into our scaled-up operational and senior management teams, we look forward to continuing In The Style’s exciting growth and achieving our long-term vision for the brand.”