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Superdry surprises investors with special dividend

 
David Madden
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Official Superdry Sport launch on the opening night of LCM in conjunction with BFC
Solid update from Superdry (Source: Getty)

Superdry revealed a respectable set of full-year figures. Underlying pre-tax profits jumped by 11.5 per cent to £97 million, in line with recent expectations.

Revenue jumped by 16 per cent to £872 million, also meeting forecasts. The full-year ordinary dividend was increased by 11.4 per cent to 31.2p, and a special dividend of 25p was revealed too. The special dividend was a pleasant surprise given the group issued a downbeat update in May.

Superdry is still expanding as franchised locations increased by 24 per cent, and the bulk of those stores were in the EU. Specific websites for Switzerland and the US have been launched, and this should help online sales.

The company issued an optimistic outlook, as it predicts high single digit revenue growth, and it foresees mid to high-teens percentage growth in ecommerce sales. Capital investment will be between £50 and £60 million, and the focus will be on infrastructure and technology. The company anticipates to open 60 franchised stores, and owned store space will increase by between 4 per cent and 5 per cent.

The British high street is suffering from higher business rates, increased employment costs and the rise in online sales, and Superdry is no different. The company confirmed that final-quarter same-store-sales slipped by 6 per cent. The firm blamed the Beast from the East for the dip in revenue. Relatively high inflation has squeezed consumers’ spending power, and that is also impacting retailers.

Fortunately, Superdry has successful wholesale and online businesses so it isn’t feeling as much pain as other fashion houses. The wholesale unit saw full-year sales rise by 29.6 per cent, and the online department posted a rise in revenue of 25.8 per cent. Given the changing trends in shopping habits, the company might look to focus attention away from the high street, and concentrate on the wholesale and online operations.

In November, the group announced that gross margin fell by 170 basis points. This is partially because of higher material costs that were not passed on to the consumer, in order to stay competitive. This has been all too common with retailers.

Superdry has a diverse business structure, and it is geographically diverse too. The firm’s global reach will stand it in good stead as having exposure to over 50 countries will reduce revenue risk. The company is making inroads into the US and China. The two largest economies in the world could be a major money spinner for Superdry. Iconic British brands such as Burberry and Mulberry have proven to be popular with international customers, and Superdry could look to emulate their success.

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