Superdry shares plunge a third as warm weather hits profit
Superdry shares plunged more than a third on Wednesday after the British fashion chain warned on profits for the second time in less than three months, blaming unusually warm weather for hitting sales of winter jackets and sweaters.
The company, which has been striving to reduce its reliance on winter clothing, said it would look at closing or relocating stores and renegotiating rent to save at least £50 million ($63 million) by 2022.
The warning came as bigger rival Inditex also blamed an abnormally warm September in part for missing third- quarter profit forecasts.
Superdry said that a “difficult trading period” had knocked £11 million off profit last month and it expected to take another hit in December if trading conditions did not improve.
It said that its underlying profit before tax could almost half to between £55 million and £70 million in the year ending April 2019, compared with the £97 million made in 2017-18.
Liberum analysts said that the market consensus prior to the latest warning had been £87 million.
Superdry shares had lost a third of their value by early morning.
“The group’s ongoing significant underperformance vs. its potential, including its margin contraction, reflects more than just tough market conditions and weather impacts,” the Liberum analysts said, adding the company’s current strategy appeared to be limiting choice online and buying more of a narrower range of goods rather than buying fewer of a larger range. Co-founder Julian Dunkerton, who left the company in March and has been pushing to return, also voiced criticism of the firm’s strategy in an interview with Liberum earlier this week.
The company said on a call with journalists that the board had considered and rejected Dunkerton’s concerns.
“From the board’s point of view, it has been since Julian’s departure that the management team has had the capacity and the freedom to be able to innovate,” a company executive said on the media call.