Online fashion brand In The Style, which uses influencers such as Stacey Solomon and Gemma Atkinson to promote its products, slipped into the red during its latest financial year despite a surge in its sales.
The Salford-headquartered company has posted a pre-tax loss of £1.5m for the 12 months to the end of March 2022, compared to a profit of £125,000 in the prior year.
However, its revenue jumped by 28% from £33.7m to £57.3m over the same period. Its shares fell by more than 34% following the publication of the figures.
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Direct to consumer revenue increased by 23% to £44.7m while wholesale revenue grew 52% to £12.6m.
In a statement issued to the London Stock Exchange, the company said its rise in revenue was "driven by the ongoing expansion and optimisation of the influencer-based business model".
As well as Stacey Solomon and Gemma Atkinson, In The Style also uses influencers such as Jac Jossa, Lorna Luxe and Perrie Sian.
During the year its marketing costs increased by 42% to £7.1m with the majority of costs relating to influencer commissions on collaborations.
Total orders increased by 13% to more than 1.5 million and the average order value rose by 21% to £52.
Chief executive Sam Perkins said: "I am pleased to report that in our first full year as a public company In The Style has delivered further strong revenue growth, representing almost +200% on a two-year basis.
"This has been supported by encouraging improvements across all our key customer and brand metrics.
"Our purpose is to inspire confidence, and this drives us to create unique products that help our customers to feel great about themselves.
"We have a strong, inclusive brand and differentiated influencer collaboration model which gives us fantastic reach, highly effective marketing, and broad customer appeal. This underpins our long-term confidence to create one of the UK's most exciting fashion brands.
"This year is expected to be a challenging one for consumers and retailers. We are taking actions to respond including prudent cost control, cash management and executing against our refined growth strategy."
On its trading during the first quarter of its new financial year, In The Style said it had been "robust in a challenging trading environment".
It added that total revenue was "broadly flat" year-on-year in the quarter while wholesale revenue decreased as "we reviewed how our launch model works in physical retail".
In The Style also said that it expects to have moved to a new 84,000 sq ft warehouse in Heywood, Lancashire, by the end of September that will "improve our fulfilment efficiency".
The number of full-time equivalent employees increased by 42% to 122 in the year.
On its future outlook, it added: "As we consider the outlook for FY23 as a whole, we have to balance our confidence in the underlying business model and the opportunity to implement our growth strategy.
"The combination of our authentic inclusive brand, our differentiated influencer collaboration model, our agile supply chain and our well invested technology platform provides us with a competitive edge that can be further leveraged.
"We are planning for group revenue to be broadly flat, with DTC revenue growing at mid-single digit rates. Revenue from our wholesale channel is expected to decline at a double-digit rate as we focus on our digital partners.
"We expect DTC [direct to consumer] gross margin to reduce but wholesale gross margin to return to FY21 levels."
In The Style added that after "taking into account all of the above, together with the very uncertain market conditions", it is forecasting an adjusted EBITDA loss for the year of £2m.
During its most recent year, it made an adjusted EBITDA of £551,000.
Despite the outlook, the company said: "The board is excited by the future growth strategy set out and is confident of the medium- and long-term growth prospects".
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