Superdry’s chief financial officer is leaving as losses increase

Superdry’s finance boss Shaun Wills will resign at the end of March after the struggling fashion retailer reported a wider half-year loss.

The group blamed unusual weather and the cost of living crisis for an adjusted pre-tax loss of £25.3 million for the six months to October 28, compared with a loss of £13.6 million last year.

Superdry, known for the Japanese graphics on its t-shirts and hoodies, saw sales plummet 23.5 percent to £219.8 million over the period.

Wills took on the role of CFO in April 2021 after three years as finance director of Marks & Spencer’s clothing and home business.

He has been replaced by former McColls director Giles David, who will join the company on January 29 and will be supported by Willis until his departure.

Superdry said David ‘has a strong track record in consumer-facing businesses, where he has successfully operated in turnaround environments’.

The company has been struggling with weaker sales and profit warnings for several years, partly exacerbated by the Covid-19 pandemic, which forced clothing stores to temporarily close to customers.

Last August, the group took out a £25 million loan from Hilco at an interest rate of 10.5 percent and suspended trading of its shares on the AIM market after failing to publish its annual accounts on time .

The group’s sales in the most recent half were particularly hit by the continued underperformance of the wholesale segment, where sales fell 41.1 percent to £62.6 million.

Superdry said the division’s performance was largely the result of recent “strategic decisions”, including the closure of its US operations, the sale of brand rights and stock clearing activities.

The wholesale business was also affected by lost accounts, financial difficulties with some key partners in mainland Europe, and the timing of inventory intake and shipment.

As part of a turnaround programme, the Cheltenham-based company is reducing inventory to a more efficient level by removing outdated products.

It now expects to own about 7 million units by the end of this fiscal, down from a peak of 18.9 million five years ago.

Superdry’s retail trading was more robust, but sales there were still down 13.1 percent after much weaker performance online and in stores.

Superdry has previously noted that demand was affected by Britain experiencing a wet summer and a very mild autumn, the latter postponing purchases of warm-weather clothing.

The retail sector was further hit by significant discounting from competitors and cost of living pressures, weakening the wider retail sector.

British retail sales fell 3.2 percent in December, the fastest fall in almost three years, according to the Office for National Statistics, as Brits bought their Christmas presents early or took advantage of Black Friday deals.

Superdry was one of many companies to suffer a problematic festive period, with group sales falling 13.7 percent in the 12 weeks ending January 20.

Julian Dunkerton, Superdry’s founder and chief executive, admitted it had ‘clearly been a difficult period’, while warning that the company ‘does not expect market conditions to get any easier in the short term’.

However, he also said: ‘Despite the short-term difficulties, we have made significant operational progress over the past six months as part of our ongoing turnaround.

“Our cost savings program remains on track and our inventory reduction program is progressing well.”

Superdry predicts it will make more than £40 million in additional savings this fiscal year, up from its previous target of £35 million.

Superdry shares fell 3.4 percent to 16.3 cents on Friday morning and is down about 89 percent in the past twelve months.

“The latest part of the Superdry saga is not a pretty one,” said Sophie Lund-Yates, chief equity analyst at Hargreaves Lansdown.

She added: ‘The part of the market that Superdry is targeting is a particularly difficult point on the spectrum. It’s not high-end enough to be considered luxury, nor is it a bargain.”