Fashion brand Superdry reduces full-year profit guidance
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Superdry slashes profit forecast after first-half losses widened as the fashion brand’s huge party trade failed to offset wholesale slump
- Superdry expects adjusted profit before tax for this year to be ‘broadly break-even’
- The Cheltenham-based company is known for the Japanese characters on its clothing
- It plummeted to an interim loss of £12.2 million, against a profit of £2.5 million last year
Superdry has cut its annual profit forecast after widening losses in the first half despite a strong festive trading season.
Julian Dunkerton’s fashion brand now expects adjusted pre-tax profit to be ‘near break-even’ for the 12 months ending April, compared to a previously estimated range of between £10m and £20m.
The Cheltenham-based company, famous for the Japanese characters on its clothing, told investors it was “very cautious about the potential for a soft spring” in light of pressure on consumer purchasing power.
Superdry shares plunged 17.3 percent early Friday morning, making them the biggest faller on the FTSE All-Share Index and bringing their decline over the past five years to around 92 percent.
Outlook: Superdry now expects adjusted pre-tax profit for the 12 months ending April to be ‘broadly break-even’ compared to a previously estimated range of £10m to £20m
Retailers across Europe and the US are also facing rising cost pressures as inflation remains stubbornly high across much of the world.
An absence of Covid-related aid, rising energy prices and staff wage increases contributed to Superdry falling to a loss of £12.2m in the 26 weeks to October 29, down from a profit of £2.5m last year.
The losses were exacerbated by a decline in sales in October amid warm weather and declining wholesale trade, driven in part by delayed price increases and deliveries and a slowdown in the Covid-19 recovery.
Wholesale revenues lagged for the next nine weeks, when they plummeted by more than half a year, though the group’s total sales still grew 4.5 percent.
The week of Black Friday, Superdry’s first major promotional event in nine months, saw record online trade, while retail sales returned to pre-pandemic levels in December.
Dunkerton, who founded Superdry two decades ago with business partner James Holder, said women’s clothing and jackets were in particular demand in the run-up to Christmas.
He added: “While we traded well in November and December, the outlook for the rest of the year is uncertain, and as a result we are moderating our earnings outlook to around break-even.”
The company’s stock price began a downward spiral in 2018 amid successive profit warnings, product shortages, hot weather and discount activity from rival fashion chains.
Problems were exacerbated by the Covid-19 pandemic, which forced clothing stores to close across much of the world and increased home working.
Superdry finally turned a profit last year as the easing of lockdown rules saw retail sales pick up again, more full-price items were sold and the Spring/Summer 2022 collections were well received by customers.
While growth has slowed since then, the company said it was “confided by our recent robust retail performance and strong demand for our brand across all regions and platforms.
“We believe that our honest approach to quality products at a great price resonates with consumers under pressure and that is reflected in our sales figures.
“The more recent trading performance over the holiday season supports our view that the brand is resonating with consumers and continuing to strengthen.”