Samarkand Group plc (SMK) Samarkand Group plc : Market Update
20-Feb-2023 / 07:00 GMT/BST Dissemination of a Regulatory
Announcement, transmitted by EQS Group. The issuer is solely
responsible for the content of this announcement.
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20th February 2023
Samarkand Group plc
("Samarkand", the "Company" or together with its subsidiaries
the "Group")
Market Update
Samarkand Group plc (AQSE:SMK), the cross-border eCommerce
technology, services and consumer brand group, this morning
provides a trading update based on recent trading conditions and
the near-term outlook in its key market, China.
In December 2022 the zero-COVID policy that had been in effect
since the start of the pandemic was reversed. The lifting of many
of the restrictions that had been in place, resulted in a rapid
spread of COVID through the population. This wave of infection
caused disruption in late December, which lasted for several weeks.
Since the Chinese New Year in late January, these impacts have
significantly abated and early signs of returning consumer
confidence are encouraging.
During the pandemic Chinese households accumulated savings which
had resulted in a 42% increase in family bank balances since the
start of 2020. This increase amounts to USUSD 4.8 trillion, a sum
which is larger than the Gross Domestic Product of the United
Kingdom. [1]
The Company assesses that the combination of this high level of
savings, the lifting of restrictions, and pent-up demand, point to
a more positive outlook for the Chinese eCommerce market in the
coming year. While the external environment appears to be
improving, the Company notes that the situation on the ground
remains hard to predict as China emerges from a period of extended
lockdowns.
eCommerce Acceleration
This area of the business, where we operate as the China market
development partner for prestigious international brands, has been
the most impacted by the disruption in China. With COVID
restrictions being removed, the mid-term outlook has strongly
improved for this part of the business. Most of our existing
partner brands are planning for strong China growth in the coming
year and we have added several new premium beauty brands to our
platform.
Owned brands
The Company's owned brands continue to trade well in the months
since the interim update. Napiers was launched into the Chinese
market with the first eCommerce livestream taking place from the
historic Edinburgh apothecary store in December on the Chinese
platform Douyin. The 4-hour event exceeded our expectations,
generating a material level of sales of Napiers skincare products.
The brand has also secured prominent listings in premium Chinese
retailer SKP as part of our plan to leverage our cross-border
eCommerce infrastructure to introduce the brand in the China
market.
Our premium fertility brand Zita West continues to attract
customers in line with expectations and is also benefiting from
growth generated by our China market eCommerce capabilities.
Probio7 has returned to growth in its domestic market and has been
able to protect gross margins by effectively managing cost
inflation.
Cross-border technology solutions
As noted in our December interims the adoption of our
cross-border DTC Checkout solution is progressing at a slower pace
than expected. This has been driven in part by the uncertainty
around China over the last 18 months and longer sales cycles than
anticipated. We continue to seek efficiencies in this specific
solution while maintaining investment in our underlying Nomad
technology platform.
Path to profitability
Further to our interim update in December, the key trading
period of November resulted in a profitable performance for the
group at a net profit level and we continue to make progress
towards reaching our key objective of becoming profitable in the
coming financial year through improving gross margin and a
reduction in variable costs. With six weeks remaining of the
current financial year the company expects results to be in line
with expectations.
David Hampstead, Chief Executive Officer of Samarkand Group,
commented "The past 18 months have been difficult for us and many
businesses in our industry. That said, with the reversal of China's
zero COVID policy and its rapid re-opening, we are looking forward
to a much-improved trading environment this year. We retain
unwavering confidence in the value of our offering and we are
well-positioned capitalise on the strong market opportunity ahead,
having already been encouraged by the positive signals we are
already seeing just a few weeks after the policy changes."
For more information, please contact:
Samarkand Group plc Via Alma PR
David Hampstead, Chief Executive Officer
http://samarkand.global/
Eva Hang, Chief Financial Officer
VSA Capital - AQSE Corporate Adviser and Broker +44(0)20 3005 5000
Andrew Raca, Evon Chan, Alex Cabral (Corporate Finance)
IPO@vsacapital.com
Alma PR +44(0)20 3405 0213
Josh Royston
Robyn Fisher samarkand@almapr.co.uk
Joe Pederzolli
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/
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[1] https://global.matthewsasia.com/insights/sinology/2022/
the-end-of-zero-covid-and-the-start-of-chinas-economic-recovery/
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ISIN: GB00BLH1QT30
Category Code: TST
TIDM: SMK
Sequence No.: 224182
EQS News ID: 1563301
End of Announcement EQS News Service
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