The founder of Superdry warned the revival of the struggling British fashion group would be a long haul after a £130m (€145m) charge for poorly performing stores pushed it into an annual loss, sending its shares lower.
Julian Dunkerton, the group’s biggest shareholder with an 18.4% stake, won a bitter battle to rejoin the board in April prompting the existing directors to resign en masse.
This followed a string of profit warnings as the retailer struggled to expand beyond its sweatshirts, hoodies, and jackets with random Japanese text and as demand fell in its wholesale and e-commerce business.
British retailers are facing a perfect storm of rising costs, uncertainty in the economy around Britain’s exit from the EU and a structural shift online. Superdry, which owns 248 stores across Europe and the US posted a pretax loss of £85.4m (€95m) for the year to April 27 compared with a profit of £65.3m in 2017 to 2018. Shares in the group fell as much as 11%, extending losses over the last year to 67%, after it forecast a slight decline in group revenue in the 2019 to 2020 financial year and only a “modest” increase in profitability on an underlying basis, prompting analysts to cut forecasts again.
“We expect our financial performance in (2019-2020) to reflect market conditions and the historic issues inherited,” Superdry said.
Analysts at Peel Hunt cut their current year forecast for pretax profit on an underlying basis by £10m to £46m. “The key for us, is whether the new management team can stabilise demand for the core ranges and product lines.” they said.
The non-cash lease and impairment charges of almost £130m booked in the 2018-2019 accounts affect about half of Superdry’s stores and reflect decreasing store revenues and the firm’s cautious recovery plan.
Mr Dunkerton said the group was reviewing its store estate but did not anticipate a significant number of closures. “The reality is landlords want us in their centres or on their high streets.” he said.
He said Superdry still saw big opportunities in the US and China but would be reviewing how it operates in both markets. On an underlying basis, pretax profit fell 57% to £41.9m. Group revenue was flat at £872m.