Superdry swings to loss as founder pledges turnaround
Superdry’s new management team has reiterated ambitions to return to profitable growth, even as the brand posted a significant loss.
The group reported a loss before tax of £85.4 million for the year to 27 April, compared with a £65.3 million profit this time last year.
On an underlying basis, pre-tax profits dropped 56.8% to £41.9 million.
Revenue was flat at £871.7 million, but the brand’s efforts to shift stock during tough periods through discounting resulted in a 2.5% decline in gross margin.
The huge statutory loss included £129.5 million in onerous lease and impairment charges, reflecting the result of a store review which identified unprofitable sites.
Shares in Superdry dropped as much as 9% in early trading on Wednesday, but later recovered to trade 2% lower at 438p.
The company’s new management said part of its strategy would include a renewed focus on using stores to drive profitable growth, with a fresh store-by-store review now under way.
As a result, no significant store closures are expected in the current financial year.
However, any leases coming to an end in the current period could be used as opportunities to relocate or reduce stores. The company has also identified opportunities for rent negotiations.
Founder Julian Dunkerton, who took the helm in April, said he wished to take Superdry back to its “design-led roots” and return it to revenue and profitability growth over a three-year period.
“Although we are only three months in, our initiatives are gaining some early traction, and I am confident we are doing the right things to ensure that, over time, Superdry will return to strong profitable growth,” he said.
Dunkerton and former Boohoo chairman Peter Williams were voted on to the board in April, triggering a mass exodus of Superdry’s then-directors, including chief executive Euan Sutherland.
The new team has since brought in retail heavyweights such as former Marks & Spencer finance boss Helen Weir and New Look alumnus Alastair Miller to beef up the board.
Analysts at Jefferies said the early signs from the turnaround were “encouraging”.
“A renewed Superdry management team is acting quickly to stem the decline in profitability and restore the brand’s design credentials,” said analyst Caroline Gulliver.
“Though there is much to be done, we believe the early signs and opportunity are encouraging.”