Superdry Plc shares plunged after the fashion retailer cut its profit outlook for the year, blaming its underperforming wholesale business and warning of potential consumer weakness in the months ahead.
(Bloomberg) — Superdry Plc shares plunged after the fashion retailer cut its profit outlook for the year, blaming its underperforming wholesale business and warning of potential consumer weakness in the months ahead.
The British retailer, known for its logo T-shirts and bright colors, now expects adjusted pretax profit to be flat for the fiscal year ending in April. That compares with a previous forecast for £10 million ($12 million) to £20 million profit.
The stock fell more than 20% on Friday morning before paring back slightly. The shares are down more than 40% over the past year.
“Everyone is celebrating a good Christmas but expressing more and more caution about how spring-summer might play out,” Shaun Wills, Superdry’s Chief Financial Officer said in a phone interview. “We’re being a bit more conservative on our own internal projections.”
Wills also highlighted the risk that the broad festive spending spree was funded by credit, and questioned whether that’s sustainable in the months to come.
A lagged recovery after the Covid-19 pandemic along with shipment timing has hurt Superdry’s wholesale business.
Wholesalers placed orders for the retailer’s Autumn stock a year earlier when the pandemic prevented them from visiting the showrooms. As a result they ordered “very safe products” rather than the newest designs, Julian Dunkerton, Chief Executive Officer, said in the same interview.
Superdry has put a new leadership team in place to handle wholesale which will make a “huge difference”, said Dunkerton. Going forward the company will direct wholesale partners to which items to buy and present them with an assortment to better represent the brand, he said.
Store revenues were boosted by customers returning to shops during the festive period with coats and womenswear performing particularly well.
The rising cost of living has led some retail observers to say shoppers are pulling back from non-essential purchases like fashion. “That hasn’t played out,” said Dunkerton. Shoppers may put off buying big-ticket items like cars and sofas but “in tough times people often turn to products to make themselves feel better,” he said.
Superdry has been trying to revamp its performance and last month secured a loan with specialist lender Bantry Bay Capital, backed by US activist Elliott Investment Management. The facility is currently “very lightly drawn,” said Wills.
Read more: Superdry Secures £80 Million Loan from Elliott-Backed Fund
(Updates with CFO and CEO comments from fourth paragraph, adds chart.)
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