Sports nutrition business Science in Sport (SIS:AIM) reported a surprisingly robust performance for the first half to June on Thursday, which included a marked acceleration in the shift to online sales as well as strong growth in the USA, sending the shares 1.6% higher to 32p.

Group revenue was down 5% to £23.6m, a much stronger outcome than the market expected given the enormous second quarter disruption caused in all markets by the Covid-19 pandemic.

TWO WINNING BRANDS

For the uninitiated, Science in Sport is the company behind PhD Nutrition, a premium protein brand targeting gym lifestyle and sports enthusiasts, and SiS, a brand prized by elite athletes and professional sports teams.

PhD brand ambassadors include endurance athlete Ross Edgley, WBA international champion Jordan Gill and leading fitness influencer Obi Vincent, while SiS is the official sports nutrition supplier to the likes of Team INEOS Cycling and supplies football clubs including Manchester United.

The London-headquartered premium performance nutrition play reacted to the pandemic by reducing costs and raising £4.5m from investors in April in order to shore up the balance sheet, now flush with £9m cash.

UK RETAIL HARDEST HIT

In today’s update, Science in Sport said the UK retail channel has seen the hardest downturn from the Covid-19 lockdown and revenue from this channel slumped 31% to £7.7 million. Encouragingly however, Science in Sport is ‘seeing some increase in demand’ and is ‘cautiously optimistic’.

In the USA, sales grew 30% to £1.5 million and management expects ‘a significantly reduced EBITDA loss in the USA, given substantial progress from a leaner cost base’.

ONLINE SALES SPRINT

Changing consumer behaviour only accelerated the shift to online in the period. In fact, online now speaks for 43% of group sales, up from 32% a year ago.

During the half, Science in Sport’s own e-commerce platform delivered revenues of £6 million across all markets, up 27% year-on-year, while sales through Amazon grew a healthy 22% to £4.1 million.

Crucially, this has been done while improving gross margins, which were up 290 basis points to 47.7% year-on-year, helping to offset the loss in revenue and meaning Science in Sport expects to maintain flat gross profit for the half.

‘While the outlook remains uncertain, and the board believes it is too early to reinstate financial guidance, the strategic drivers of the business remain strong,’ said Science in Sport, which expects to ‘return the business to its proven growth trajectory as and when the pandemic abates’.

THE LIBERUM VIEW

Liberum Capital commented: ‘The shift to online has accelerated significantly and looks set to continue which will only help drive further top line momentum in the second half.

‘Multiple drivers behind gross margins provides confidence these too should continue in the second half and beyond. A premium branded product offering that is firmly positioned in the health and well-being as well as the fitness categories is a good place to be.’

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Issue Date: 09 Jul 2020