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Fashion brand In The Style has warned that its profitability will be hit by high shipping costs and increased returns from customers, amid disruptions to UK supply chains.
Shares in the company dipped more than 10% after the profit warning, despite In The Style revealing a recent spike in sales.
The business expects to see high freight costs and shipment disruptions to continue “at least” until the end of March, when its financial year comes to a close.
Customers have also been sending back an increasing number of products, the company said.
“Increased freight costs and disruption to the timing of shipments are expected to remain for at least the remainder of the current financial year,” it told shareholders.
Shopping habits have shifted in recent months, as sales of dresses and other occasion wear spike as social restrictions lifted.
On Friday the company told shareholders that revenue was up 45% between April and August this year, compared to the same period a year earlier.
Its wholesale sales spiked 200% after launching a partnership which saw its clothes rolled out into 100 Asda shops in May.
Meanwhile, the company’s app is playing an ever greater role in the business.
App sales rose to 62% of all e-commerce sales, compared to just 53% a year ago.
There has “been a shift in demand towards occasion wear” in the period, In The Style said.
In April the UK’s lockdown restrictions that had been put in place four months earlier started to ease.
This was followed by further easing in coming months.
As a result people are socialising more, so want more and are spending more on special clothes, which are typically sold at higher returns than leisurewear, which dominated sales last year.
Chief executive Adam Frisby said: “We are pleased with the strong sales momentum achieved during the financial year to date.
“This momentum has been supported by increasing consumer awareness of In The Style and our clear brand mission to empower customers to be brave, embrace body confidence and, most of all, love themselves for who they are.
“We continue to invest in our team and infrastructure to support our long-term growth, and despite the widely-publicised external headwinds expected to continue to impact across the retail industry over the coming months, we remain very well positioned to continue to grow In The Style and achieve the brand’s exciting potential.”