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Superdry half-year profits slump by almost 50% due to unseasonably warm weather

Lauretta Roberts
12 December 2018

Superdry's underlying profit before tax slumped by 49% to £12.9m in the six months to 27 October as the group said its reliance on outerwear meant been adversely affected by unseasonably warm weather – a fact it is attempting to address with its product mix and ranging.

Global brand revenue was up 6% to £831.8m during the period, and while the group said it had recently enjoyed a strong Black Friday, its challenges have continued into November and December. The adverse affect of the unseasonably warm weather had hit profits to the tune of £11 in November alone with "a potentially similar profit impact" in December if trading conditions do not improve.

Superdry said it was addressing the weakness is its product range over an 18-month transformation programme to reduce the reliance on outerwear and to introduce innovation where it had been lacking. It also revealed it was planning a move into kidswear from AW19 and was developing a licensing programme to deliver an incremental £10m per annum royalty margin benefit by FY22.

It is also seeking to improve its environmental credentials – a move which would be popular with younger consumers – with the roll-out of its first 100% organic products with a view to taking the brand 100% organic by 2040.

Chief executive Euan Sutherland said the first half had been "difficult" due to the unseasonably warm weather and an increasingly discount-driven market.

"In the spring of this year we started an 18-month product innovation and diversification programme. This will increase choice for consumers around the world and address the current over-reliance on jackets and sweats. We are accelerating into new categories and are particularly excited by the upcoming launch of Superdry Kids. At the same time we are evolving the brand through targeted investment. In everything we do we will build on Superdry's heritage of offering exceptional quality and design detail at outstanding value.

"Superdry is a strong brand and has strong operational capabilities. We are focused on an intensified transformation programme to reset the business and address the legacy issues we face, particularly in product mix and range.

"Superdry is responding to its internal challenges as well as a changing world and changing consumers. Our comprehensive transformation will ensure Superdry is well positioned as we optimise our routes to market and make our business more efficient. We are confident that our transformation programme combined with the underlying operational strengths of the business will deliver a return to higher levels of growth and profitability while realising geographic expansion opportunities and leveraging our multi-channel operating model to serve customers in whichever way suits them best," he said.

The slump in profits will no doubt embolden the brand's co-founder Julian Dunkerton, who is campaigning to be re-instated at the business, saying he does not believe in its current strategy. Dunkerton is said to have hired a PR company to help him with his bid to return and was this week quoted in a stockbroker note saying he left the firm in March because he could not "put his name" to its strategy.

Following Dunkerton's comments the brand's shares dropped 7% yesterday, closing at 573p. At the start of the year the brand's shares were trading at around 2,000p.

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