Superdry warns on profit as wet weather takes its toll
Superdry blamed unseasonable weather for a 13 per cent slump in retail sales year-on-year, as the struggling fashion retailer continues to trade below management expectations.
Wholesale earnings were down 41.1 per cent year-on year, which was due to the decision to exit its US wholesale operation. It was also driven by “timing differences and the underperformance of the channel”, a full year trading update published this morning said.
The company’s share price slide over 16 per cent this morning as the London market.
Julian Dunkerton, founder and chief executive of Superdry said: “The un-seasonal weather through the early autumn led to a delayed uptake of our Autumn/Winter range and this impacted sales in the first half of the year.
“Whilst we have seen modest signs of improvement through the recent spell of colder weather, current trading has remained challenging, and this is reflected in the weaker than expected business performance.”
In the last year, Superdry has been trying to keep its head above water and has introduced a number of cost cutting measures.
Back in October, it signed a joint venture with Reliance Brands Holding UK Ltd (RBUK) for the sale of its intellectual property in South Asia, in its latest bid to boost funds.
It mirrored an agreement announced by Superdry in March to sell the intellectual property of its Asia Pacific offering to South Korean retail group Cowell Fashion Company for $50m (£40m).
Dunkerton added: “The operational progress we have made in the first half has been more encouraging with the IP sale for the South Asian region and strong progress on our cost efficiency programme.”
Russ Mould, investment director at AJ Bell, said: “We’ve seen various troubles across the fashion sector including H&M being stuck in the mud for some time, Inditex seeing a slowdown in growth and ASOS recently saying sales would not meet market expectations.
“Consumers are being more cautious about fashion spending and they’re leaning more on cheap names such as Chinese group Shein, which is proving to be a serious competitive threat to Western brands.”
“True to form, Superdry has joined the club with a poor trading update that’s pulled its share price down more than 20 per cent to 32p. It’s hard to believe that this time six years ago the shares traded around £20. This business has not simply faced more competition, it has truly lost its way.”
He added: “Superdry has been trying to revive its fortunes for years but the wholesale channel has proved problematic. “
“Margins have been hit by continued clearance of old stock at a discount and in September it said trading had suffered by unseasonal weather and highly promotional markets. While the weather has been on its side more recently, it’s not enough to save Superdry from racking up yet another profit warning.”