Seraphine: Maternity brand adored by Kate Middleton sees shares plunge as hefty headwinds loom
A maternity brand whose clothes have been flaunted by Kate Middleton has seen its shares plunge almost 40 per cent after a gloomy forecast.
Shares in Seraphine plummeted some 38 per cent on Thursday as the digital-led fashion brand lowered its expectations for the coming year amid war in Ukraine and other macroeconomic headwinds.
The London-based firm slashed its full year forecast after noting “a number of margin and costs challenges,” particularly in distribution and customer acquisition marketing.
After a reconciliation of both the 2021 and 2022 full year accounts, the brand had identified “additional one-off non-cash corrective items, including previously unreconciled customer refunds and stock adjustments.”
The company said it was now expecting full year 2022 sales of around £44.1m and adjusted EBITDA (pre-IFRS16) of not less than £3m.
Market expectations for the 2023 financial year were also adjusted after “well reported sentiment issues affecting the industry,” the firm said on Thursday.
The group said it now expected sales growth of 10-20 per cent and an improvement in EBITDA margin in a range of eight to nine per cent.
Seraphine said market conditions had become “significantly more challenging” since Russia’s invasion of Ukraine in late February.
War in Ukraine had weakened consumer sentiment which was then exacerbated by the rising cost of living.
The maternity and nursing wear brand, which opened the doors of its first shop in Kensington in 2002, said it “has not been immune to these sector wide pressures.”
Households are facing bill increases across the board after spikes in energy, grocery and fuel costs this spring.
Despite its dismal forecast, Seraphine announced strong year on year revenue growth of 33 per cent on a constant currency basis, including 52 per cent growth in North America, in a trading update for the year ended 3 April.
Revenue growth and “excellent progress” in the US was reflective of the underlying strength of the business, David N Williams, CEO of Seraphine, said.
He added: “While we are disappointed that a combination of internal and external factors has affected the outturn for the year and expect consumer sentiment to remain subdued in the short term, we are confident in the strong underlying fundamentals of the business and our ability to scale up and deliver growth in the medium term.”
The company made its debut on the London Stock Exchange last summer, with a market valuation of just over £150m.