Science in Sport reports €1.4m H1 loss as marketing spend rockets

SiS’s sales and marketing costs soared more than 50% compared to the same period last year, reaching nearly €3.2m, as the firm spent heavily marketing the launch of its whey protein range in January, and its Go isotonic energy gels from April onwards. But the company said this had produced record revenue results for the period.

According to SiS’s results statement, the firm’s underlying loss was €450,000, but share charges related to its management incentive scheme cost it €735,000, with depreciation charges adding another €234,000.

H1’s heavy marketing spend​

“The marketing investment for the year has been weighted heavily towards the first half of the financial year. This investment has paid dividends through a sharp increase in brand awareness, and the delivery of four record months of sales in excess of [€1.36m] per month. The sales momentum driven by this investment has carried into the second half. In addition, we invested in market analysis and the development of a US market entry strategy​,” said SiS statement.

According to the statement, the firm’s new products delivered 6% of its total sales for the period. The company said it expected new products to deliver strong growth in the second half of the year, and without such a high marketing spend, expected to report a profit for H2.

“We have invested heavily in digital marketing during the first half and the benefits are evident in both growth and sharply improved brand awareness. We expect revenue growth in the second half of the year to continue to be broadly in line with the first half which, due to the planned first half weighting in our investment, will enable the company to report a positive EBITDA for this period​,” said SiS CEO Stephen Moon in a statement.

“Our model of consistent investment in the brand to underpin revenue growth, together with attention to gross margin and tight control of overheads continues to work. We remain confident in our strategy and believe we will continue to deliver strong growth​,” he added.

Gross margins stay high​

SiS’s gross profit margin was 58.2%, down just 1% from the year before, and demonstrative of the “strategic advantage​” of the firm’s low-cost manufacturing facility in Nelson, Lancashire, according to the results statement. In the channel, the firm started selling through supermarkets Asda and Morrisons during the period, and described retail sales as “resilient”. Its international sales grew 19% year-on-year.

“International and online growth has been particularly strong and we believe these channels will continue to play a key role in the medium and long term growth of the business. In addition to existing international markets, we have also invested in developing launch strategies for new territories​,” said Moon.