Superdry shares tumble as fashion retailer warns on profit
Superdry shares tumble as fashion retailer blames cost-of-living crisis and bad weather for profit warning
- Sales in February and March fell short of expectations, the company said
- It announced cost savings of around £35m, including through ‘estate optimisation’
- The retailer is also considering a fundraiser of up to 20% in an effort to raise cash
Superdry has warned earnings for the year will fall below previous expectations, sending shares in the fashion brand down 16 per cent.
The retailer, known for its hoodies and jackets that David Beckham and Idris Elba once flaunted, said sales in February and March fell short of expectations.
It blamed “factors beyond the company’s control” for disappointing sales, including the cost-of-living crisis and inclement weather that boosted demand for its spring-summer collections.
Superdry has decided to withdraw its earlier profit forecast after disappointing sales
The company told shareholders it has decided to retract its earlier earnings forecast that it would broadly break even for fiscal year 2023.
It also announced cost savings of around £35m, which it plans to achieve through ‘estate optimisation’ – signaling possible store closures – as well as more discounts on its clothing range.
Meanwhile, founder and CEO Julian Dunkerton, who has previously dismissed speculation that he wanted to take the company private, said the group was considering fundraising of up to 20 percent in an effort to raise cash.
Superdry shares fell 16 percent to 89.90p in early Friday trading, back to their 2020 lows amid the pandemic.
They are down 35 percent since the start of the year and 50 percent in the last 12 months.
“The Superdry brand continues to evolve, but there is no doubt that the market conditions we are facing are challenging, compounded by the issues we have previously disclosed and are working to address in the wholesale business,” said Dunkerton.
“As a result, we need to ensure that our business is in the right shape to navigate these challenging times while continuing to deliver like-for-like retail sales growth. That is why we look closely at our cost base.
“My belief in the Superdry brand is stronger than ever and therefore I am ready to give material support to any capital increase undertaken.”
Chris Beauchamp, chief market analyst at trading platform IG Group, believes Superdry’s problems stem from the company’s failure to present a convincing long-term plan.
“Superdry can blame the cost-of-living crisis and bad weather for its performance, but the market hasn’t been as discriminatory, sending shares back to 2020 lows,” he said.
“It’s a far cry from its share price of nearly £20 five years ago, but Superdry has consistently failed to build a compelling longer-term plan, and it has suffered accordingly.”