Superdry witnesses its stock plummet in early trading today after issuing a dramatic profit warning on the back of underwhelming sales over its peak Christmas trading period.
The fashion retailer now expects underlying profit before tax to range up to £10m, but warned it could vanish altogether after booking “lower than anticipated” retail sales of £23m since Black Friday.
That compares to analyst expectations of a £40.5m profit for the year.
Most of those £23m sales have come online but Superdry warned the challenge will remain until it launches its autumn/winter 2020 range.
Superdry’s share price sank 20.2 per cent to 376.4p on the FTSE, leaving it far from its peak of 2,040p when it floated two years ago.
Wholesale performance was held back by “timing issues” in the quarter from late October to early January, Superdry added. The company said it expects a fresh £5m shortfall in wholesale to partially reverse over the financial year.
“Everyone at Superdry continues to work intensively to deliver the turnaround of the business,” said chief executive Julian Dunkerton.
He warned that his decision to reduce discounts on the brand’s clothing has helped margins but hurt sales given the amount of industry discounting around Black Friday and Christmas.
“While we have always said it will take time, we continue to make progress in implementing our strategy,” Dunkerton said.
“A key element of this is to focus on and return to full price sales and reduce promotional activity, and we halved the proportion of discounted sales over our peak trading period, benefiting both our margins and the Superdry brand.
“However this adversely affected our sales during the peak trading period given the level of promotional activity in the market. Despite this, our disciplined plan to reinvigorate the brand and return Superdry to sustainable long-term growth is on track.”
“A terrible Christmas trading period as the retailer continued to reposition the brand following the boardroom fall out last year,” research firm Retail Economics’ chief executive, Richard Lim, said.
“Double-digit declines across the group and a woeful online performance demonstrate just how far the retailer has fallen behind its competitors.
“It appears that Superdry is another victim of positive Black Friday sales coming at the expense of Christmas trading. Rational consumers pulled forward their Christmas shopping at discounted prices leaving the traditional peak sales period void for retailers.
“Disappointing post-Christmas clearance sales also showed that discounting fatigue set in by the time retailers are ready to clear wanted stock.”
Spreadex financial analyst Connor Campbell posited whether anyone knows what to do with the brand, given the profit warning.
“No-one knows what to do at Superdry, not even returning CEO Julian Dunkerton,” he said.
Dunkerton returned to the high street brand he founded last year with a remit to restore profit and credibility.
But his company swung to a £4.2m pre-tax loss in its half-year results before Christmas.
Revenue also dropped 11 per cent to £370m, and Superdry paid an interim dividend of 2p per share.
Main image credit: Getty