Samarkand Group plc : Trading Update

17th April 2023

Samarkand Group plc
 

("Samarkand", the "Company" or together with its subsidiaries the "Group")

Trading Update

Samarkand Group plc (AQSE:SMK), the cross-border eCommerce technology, services and consumer brand group, this morning provides a trading update for the year ended 31 March 2023 (“FY23”).

FY23 results are expected to be slightly ahead of market guidance, demonstrating the ability with which the Group has navigated a period of extended disruption in its largest market, China. 

Despite the well-documented headwinds, Samarkand has grown top line revenues in the range of 2% to 4% year on year. Gross profit margins have improved materially on the prior year due to improvements in mix and bolstered by the contribution from recent acquisitions. As a result of selective adjustments to our cost base and improvements in operating efficiency the Group has cut EBITDA losses by over 50% against the prior period and is making strong progress in returning to profitable growth in FY24.

The reopening of China following extended Covid lockdowns marks a return to a more normal trading environment and the Company is optimistic with regards to consumer demand for international brands, the prospects for cross border eCommerce and the overall consumer market in China. We note that consumer confidence in China remains impacted since the onset of COVID and that the overall rate of growth in the Chinese market is lower than the exceptional levels before the pandemic.

Good progress is being made against our strategy of:

• Expanding our portfolio of client brands distributed in China, with increasing gross margins from distribution activities
• Increasing our routes to consumer and broadening our sales channels
• Growing revenues of our owned-brand portfolio
• Leveraging our Nomad Technology platform to enable new routes to the consumer and merchant opportunities

Client wins include a number of new niche international brands in trending categories in China, such as hair colouring, clinic led skin care and beauty devices.  We have strengthened our live-stream commerce capabilities and formed partnerships with leading domestic and international Chinese influencers to offer brands new sales opportunities. This has expanded Samarkand’s role in enabling cross border transactions on fast growing Chinese platforms such as Douyin (TikTok in China) for international brands and merchants.

We are well-positioned to capitalise on the fast growth of the live-streaming sector in China which has been used to great effect for clients and the Group’s owned brand. Across a series of four livestreams in the last quarter of FY23, we have seen a significant sales uplift in China, particularly Napiers.

FY24 performance is currently anticipated to be in line with market expectations, delivering an acceleration in top line growth and returning to profit as a result of the Company’s improvement in mix and operational leverage. The continued growth in Samarkand’s owned brand portfolio is accretive to margin structure and has the added benefit of reducing reliance on the China market.

David Hampstead, Chief Executive Officer of Samarkand Group, commented “After an unprecedented twelve months we have finished the year ahead of guidance and are making good progress on our return to profitability. There is no doubt that the experience of the last 3 years will have an impact on consumer demand in China but we are well placed to capitalise on the opportunities ahead of us. Our owned brands have performed well throughout the period of disruption and now account for around 40% of group revenues. Zita West, as a premium fertility supplement brand, is well positioned both in China and globally given global fertility trends. Napiers has performed particularly well in recent months. We have leveraged our technology and channels enabling a 160 year old brand to reach an audience of millions via live-streaming in China.”

For more information, please contact:

Notes to Editors

Samarkand is a cross-border eCommerce technology and retail group focusing on connecting International Brands with China, the world's largest eCommerce market. The Group has developed a proprietary software platform, the Nomad platform, which is integrated across all necessary touchpoints required for eCommerce in China including eCommerce platforms, payments, logistics, social media and customs. The Nomad platform is the foundation on which the Group's Nomad technology and service solutions are built. The core products include Nomad Checkout, Nomad Storefront and Nomad Distribution. 

Founded in 2016, Samarkand is headquartered in London, UK with offices in Shanghai.

For further information please visit https://www.samarkand.global/