Seraphine profits fall below expectations despite revenue growth

Maternity brand Seraphine has revealed its adjusted EBITDA has come in below previously guided expectations despite posting a 33% increase in annual product revenue to £44m. For the 52 weeks to 3 April 2022, it revealed Adjusted EBITDA was down -58.6% to £2.6m (FY21: £6.2m) due to a “number of factors including lower than expected product revenue growth, increased supply chain costs, increased marketing costs and unexpected costs of entering new markets”. It comes as it revealed its own wn digital platform product revenues increased +25.2% (CCY) to £37m (FY21: £30.5m) while its digital partner product revenue grew +87.8% (CCY) to £4.4m (FY21: £2.4m). Looking ahead, Seaphine said it is continuing to experience significant inflation in marketing costs - having to spend 33% more to maintain prior year product revenue levels. It also confirmed it is updating guidance to 0-15% product revenue growth and it expects to remain profitable with “margin improving throughout the range”. David Williams, CEO, said: "It has been a challenging year, both externally for the consumer sector as a whole and internally for the group. We have taken decisive action to respond to these challenges. “Internally, we have strengthened the team and our new CFO Lee Williams has made good progress on delivering improvements to our finance function, systems and processes. We have also been nimble in responding to external challenges, reallocating marketing spend and conducting a strategic re-pricing to optimise value.” He added: "Despite these challenges, we have delivered significant product revenue growth in the Period, showing the strength of our strategy, brand and our customer proposition. Additionally, all non-financial KPIs have grown - customers are visiting our websites more and when they are, they are buying more; which illustrates the strength of Seraphine's unique products. "Seraphine is a market leading maternity wear business with a strong and well-loved brand, delivering a customer proposition, globally, that improves the journey of motherhood. There is no doubt that our first year as a listed company has been challenging - but I am confident that, coupled with our strong business fundamentals, we now have the team, the structure and the functions in place to focus on delivering profitable growth."