Losses have ballooned at eco laundry challenger Smol as it prioritised investment to make a bigger impact and sell more of its sustainable household products
Revenues raced 27% higher to £31.2m in the year to 30 June 2023 as it served more customers and registered higher spending, supported by new product launches, according to its latest accounts.
However, pre-tax losses widened from £1.2m to £5.2m as Smol continued investing in direct marketing and infrastructure.
Gross margins remained consistent at 53% despite volatility in raw material costs, with gross profits growing in line with top-line growth. But distribution costs rose 17% to £8.6m while administrative expenses almost doubled to £13.7m, with staff costs up more than 60% as average employees rose year on year from average of 56 to 87.
The accounts said the DTC business had maintained “a healthy cash position” following the $34m series B funding round in 2021.
Founded by former Unilever executives Nick Green and Paula Quazi in 2018, Smol makes a range of laundry capsules, dishwasher tablets, fabric conditioner and surface sprays with fewer chemicals than regular brands and more eco-friendly, plastic-free packaging.
“As a purpose-led business, we put all of our effort into making a bigger impact,” Green told The Grocer.
“Our growth in 2023 is a reflection of the success of this strategy. Each new customer is a step towards greater impact.
“Our approach of combining great performance and accessible prices, with brilliant service and sustainable benefits really resonates with our customers.
“Our growth strategy has always been guided by solid unit economics and capital efficient growth. The investment that we are making in growing the business and supporting infrastructure is in line with our plan to fuel further growth and, ultimately, our impact.
“With customer sign-ups and uptake of additional new products higher than ever, we’re delighted with our progress in 2024 so far.”
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