British fashion group Superdry has issued a profit warning after revenue fell by more than 15 per cent over the Christmas period.
The chain, which has 10 Irish stores including two in Northern Ireland, issued a note to investors on Friday for the period October 27th, 2019, to January 4th, 2020. Group revenue for the period was down 15.8 per cent.
“Despite a strong Black Friday event, peak trading performance has been lower than expected as we continue our strategic transition to a full-price stance,” said the company.
“Over this period the high street has seen unprecedented levels of promotional activity coupled with subdued consumer demand immediately after Christmas.
“These factors, combined with shortages of some better-selling product, driven by the need to reduce our inherited inventory position, adversely impacted our sales during peak trading.
“We have been encouraged by initial customer reaction to the limited amounts of the new management team’s autumn/winter 2019 stock. However, this has not been sufficient to offset weaker trading on older product.”
The company said that, taken together, these factors led to lower-than-anticipated retail sales of £23 million since Black Friday, predominantly online.
“Whilst we are encouraged by response to the limited ranges that we have introduced, this challenge will remain until the new design philosophy and product can be fully implemented across the entire range, with full impact expected by the launch of autumn/winter 2020,” it said.
“Our wholesale performance has been impacted by certain timing issues during the quarter. While this shows a further £5 million sales shortfall since Black Friday, we expect this to partially reverse during the balance of the financial year.
“The benefit of strong gross margins and cost initiatives will not fully offset the profit impact of the aggregate shortfall in sales.”
Superdry said that accounting for its revised sales expectations for the balance of the financial year, and the “challenging trading environment in which we are operating”, it now expects underlying profit before tax to be in the range of £0-10 million.
‘Disciplined plan’
Superdry chief executive officer Julian Dunkerton said there was a "disciplined plan" in place to turn the business around.
“Everyone at Superdry continues to work intensively to deliver the turnaround of the business,” he said.
“While we have always said it will take time, we continue to make progress in implementing our strategy.
“A key element of this is to focus on and return to full-price sales and reduce promotional activity, and we halved the proportion of discounted sales over our peak trading period, benefitting both our margins and the Superdry brand.
“However, this adversely affected our sales during the peak trading period given the level of promotional activity in the market. Despite this, our disciplined plan to reinvigorate the brand and return Superdry to sustainable long-term growth is on track.”
