Superdry shares plunge on profit warning
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 jerseys.
The company, which has been striving to reduce its reliance on winter clothing, said it will look at closing or relocating stores and renegotiating rent to save at least £50m 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 a “difficult trading period” knocked £11m off profit in November and it expects to take another hit in December if trading conditions do not improve.
It said its underlying profit before tax could almost halve to £55m-£70m in the year ending April 2019, compared with the £97m made in 2017/18.
Liberum analysts said the market consensus prior to the latest warning was £87m.
THE GROUP’S ONGOING SIGNIFICANT UNDERPERFORMANCE
… REFLECTS MORE THAN JUST TOUGH MARKET CONDITIONS
Superdry shares were down 33.6% in early morning trading at 380.3p, after touching a sixyear low of 373.6p.
“The group’s ongoing significant underperformance versus its potential, including its margin contraction, reflects more than just tough market conditions and weather impacts,” the Liberum analysts said, adding the company’s strategy appears to be limiting choice online and buying more of a narrower range of goods rather than buying less of a larger range.
Co-founder Julian Dunkerton, who left the company in March, also voiced criticism of the company’s strategy.
The company said the board has 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.
Superdry has been striving to diversify from its trademark hoodies and tops into dresses, skirts, women’s tops and denim, as well as expanding into premium, sports and licensed goods.