Fashion brand Superdry reduces full-year profit guidance

Superdry has lowered its annual earnings forecast after losses widened in the first-half, despite a strong festive trading season.

Julian Dunkerton’s fashion brand now anticipates adjusted pre-tax profits to ‘broadly breakeven’ for the 12 months ending April, compared to a previously guided range of between £10million and £20million.

The Cheltenham-based company, famous for the Japanese characters on its clothes, told investors that it was ‘very cautious about the potential for a soft spring’ in light of the squeeze on consumer spending power. 

Superdry shares dived 17.3 per cent on early Friday morning, making them the biggest faller on the FTSE All-Share Index and taking their decline over the past five years to approximately 92 per cent. 

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 relief, soaring energy prices and staff wage hikes contributed to Superdry plunging to a £12.2million loss for the 26 weeks to 29 October, against a £2.5million profit the previous year.

Losses were also compounded by turnover moderating in October amid a warm weather spell and declining wholesale trade, caused partly by delayed price increases and deliveries and a Covid-related lag in recovery.

Wholesale revenues continued to lag during the following nine weeks, when they plummeted by more than half year-on-year, although the group’s total sales still grew by 4.5 per cent.

Record online trading was seen over the week covering Black Friday, Superdry’s first major promotional event in nine months, while store revenues returned to pre-pandemic levels in December.

Dunkerton, who founded Superdry two decades ago with business partner James Holder, said womenswear products and coats were in particularly high demand in the run-up to Christmas.

He added: ‘Whilst we did trade well through November and December, the outlook for the remainder of the year is uncertain, and as a result, we are moderating our profit outlook to broadly breakeven.’

The company’s share price began a downward spiral in 2018 amid successive profit warnings, product shortages, hot weather and discount activity by rival fashion chains.

Problems were exacerbated by the Covid-19 pandemic forcing the closure of apparel shops across much of the world and the growth of working from home.

Superdry eventually bounced back to profit last year as loosening lockdown rules helped store sales surge back, more items were sold at full price, and its spring/summer 2022 collections received a warm reception from customers.

Though growth has moderated since then, the firm said it ‘gained confidence from our recent robust retail performance and the strong demand for our brand across all geographies and platforms.

‘We believe that our honest approach to high-quality products for a great price has resonated well with consumers under pressure, and we can see that reflected in our sales numbers.

‘The more recent trading performance through the holiday period supports our view that the brand is resonating with consumers and continues to strengthen.’