SuperGroup, the company behind fashion brand Superdry, has posted a 30% drop in first-half profits, a disappointing debut for its new chief executive, the former Co-op boss Euan Sutherland.
The company, whose clothes are worn by David Beckham and Pixie Lott, has been affected by the unusually warm autumn weather which put shoppers off buying coats and knitwear. Underlying profits before tax fell to £12.5m for the six months to 25 October, from £17.9m a year earlier. Overall revenues climbed 8.4% to £208m but like-for-like sales dropped 4.1%.
Despite the news, the retailer, which has 549 Superdry-branded stores and concessions across 47 countries, stuck to its estimate of full-year profits of £60m to £65m. It explained that while the first half of the year was “disappointing,” with a mixed customer reaction to its spring and summer ranges, the second half usually acccounts for the bulk of annual profits.
Sutherland, who took over from Julian Dunkerton in October (Dunkerton is now brand director), brushed off the impact of the mild autumn, and insisted the company was “well prepared for the important peak season”.
But he added: “I have identified that there are some parts of our operations that we can improve. I am reviewing every aspect of the business, including the execution of our strategy, cost management and capital allocation and will report our conclusions in the spring.”
Analysts say SuperGroup has been hit more than most fashion chains by the warm weather because its outerwear makes up a larger proportion of its ranges, although it has also been hurt by its avoidance of discounting.
Freddie George, analyst at Cantor Fitzgerald, said that unlike previous years he had not spotted any likely “mega sellers” for Christmas in Superdry stores, such as the Superdry windcheater.
He argued: “The company now needs to manage a step change in product development. The launch of skiwear and the rugby ranges to coincide with the Rugby World Cup will go some way in this journey. At the same time, we continue to believe that there is a great opportunity to develop the business overseas.”
He believes there is a good chance the company will start paying dividends in light of its strong balance sheet.
