British maternity-wear specialist Seraphine has released its interim results for the first half of the year, highlighting its resilience in the face of a challenging economic environment. Despite a decrease in revenue and widened losses, the company remains optimistic about its performance in the US market. As a result, Seraphine has decided to temporarily pause its plans for further international expansion in order to focus on strengthening its presence in existing markets.

During the first half of the year, Seraphine reported a 9.1% decline in product revenue, totaling £18.9 million. When adjusted for currency fluctuations, this decline was even more pronounced at 12.1%. The overall decrease can be attributed to the difficult retail trading environment that the entire sector has faced. Product revenue from Seraphine’s own digital platform fell by 8.8% to £16.1 million, primarily due to increased marketing costs affecting efficiency. Additionally, product revenue from digital partnerships saw a significant decline of 34.2% to £1.2 million as the company prioritized profitability in this channel. However, Seraphine did experience a 24% increase in product revenue to £1.5 million from retail stores.

In terms of regional performance, Seraphine saw growth in the American market with a 6.6% increase in product revenue. However, when considering currency fluctuations, the growth was more modest at 2.1%. On the other hand, the EU market experienced an 18.8% decline, while the UK market saw a decrease of 11.7%. Despite the overall decrease in gross profit from £13.6 million to £12.4 million, Seraphine managed to improve its gross profit margin slightly to 65.7% by carefully balancing promotional activities with price increases.

The company’s operating loss widened to £3.8 million from £3.4 million, and adjusted EBITDA recorded a loss of £1.5 million compared to a profit of £2.9 million in the previous year. This can be attributed to a decline in revenue, increased marketing costs, and additional overheads resulting from investments in senior personnel. Seraphine experienced a decline in website traffic from 7.7 million to 7.4 million, and the conversion rate dropped to 2.61% from 2.9%. Total orders also decreased from 226,000 to 194,000, although the average basket value increased to £153 from £135.

Despite the challenges faced in the first half of the year, Seraphine remains optimistic about its performance in the US market, which is its largest individual country market. The company believes that the launch of its new ‘Curve’ range has made its products more appealing and accessible. Moving into the second half of the year, Seraphine’s trading has been in line with management’s expectations. Sales on its own digital platform have improved and are now on par with the previous year in terms of constant currency, thanks to a successful Black Friday period.

Although sales volumes from digital partners have significantly reduced, the profit contribution from this channel has remained relatively stable compared to last year. This reflects Seraphine’s strategy to prioritize profitability over growth in digital partnerships. However, the performance of the company’s retail stores continues to lag behind pre-pandemic levels, with trading in the first nine weeks of the second half of the year being softer than in the first half.

CEO David Williams acknowledged the challenging retail sector in the first half of the year, citing the macro-economic backdrop and inflation in marketing costs as contributing factors. However, Williams emphasized Seraphine’s focus on improving profitability and streamlining its internal business functions, leading to improvements in key operational KPIs. He highlighted that Seraphine achieved higher basket sizes and improved gross product margins compared to the previous year, demonstrating the resilience of its target demographic and the company’s prudent approach to promotions and pricing.

Looking ahead, Seraphine remains committed to its strategy of delivering innovative and stylish maternity wear to customers worldwide. While the company has decided to temporarily halt international expansion, it will concentrate on product innovation and enhancing its service proposition in existing markets. Seraphine has exciting new products planned for the future and is confident in the strength of its niche yet loyal customer base, who often make non-discretionary purchases. The company firmly believes it is building a robust platform for long-term success.

Useful Links:
– [Seraphine Official Website](https://www.seraphine.com/)
– [Seraphine US Market](https://www.seraphine.com/us/)