Fashion chain Superdry has warned over its profits and revealed plans to cut costs by more than £35 million after struggling against dampened consumer spending.
The retailer said it was considering a fundraise in a bid to shore up cash to help it “emerge from the current turbulence”.
Its share price plunged by around 18% in early Friday trading after the update.
Cost-of-living pressures have had a significant impact on consumer spending and visits to shops, and poor weather weakened demand for its new spring and summer collection, Superdry told investors.
These issues, “outside of the company’s control”, meant sales in February and March did not meet its expectations.
It therefore cut its revenue expectations and said it had withdrawn its previous profit guidance that it would broadly break even in the 2023 financial year.
It is the second time this year that Superdry has downgraded its pre-tax profit expectations.
The retailer, which suffered a hit from shipping delays, less consumer spending and spiralling costs, revealed cost-cutting plans to help revive the business.
It is set to make savings of more than £35 million, through actions such as “estate optimisation”, which could indicate store changes or closures, logistics and distribution savings, and continuing to reduce its clothing range.
The savings are expected to be made by the end of the 2024 financial year, incurring any costs to achieve them this year.
But the move is set to lift its underlying profitability in the medium term, the firm said.
Furthermore, Superdry said it was considering an equity raise of up to 20% of its share capital in further efforts to bolster its balance sheet.
Founder and chief executive Julian Dunkerton said he could chip into the fundraise himself, which reflects his “confidence in the prospects of the business”.
Mr Dunkerton said: “The Superdry brand continues to evolve but there is no doubt that the market conditions we face are challenging, compounded by the issues we have previously disclosed and are working to address in wholesale.
“As a result, while we continue to deliver like-for-like growth in retail sales, we need to ensure our business is in the right shape to navigate these difficult times, which is why we are looking hard at our cost base.
“My belief in the Superdry brand is stronger than ever which is why I’m prepared to provide material support to any equity raise undertaken.
“I am confident that we have the right plan and, working together as a team, the business will emerge from the current turbulence stronger than ever.”
Press Association – Anna Wise