Superdry back in the black but FY23 profits set to fall

Fashion brand Superdry said on Friday that it swung to a full-year profit as revenues rose, thanks in part to an increase in full price sales, but warned that profit for FY23 was set to fall amid cost inflation.

In the 53 weeks to 30 April, the company swung to an adjusted pre-tax profit of £21.9m from a loss of £12.6m a year earlier. On a statutory basis, pre-tax profit was £17.9m, versus a loss of £36.7m the previous year.

Total revenue rose 9.6% to £609.6m. Superdry said this was largely as a result of lapping enforced store closures and the lifting of restrictions in its key markets.

Retail store revenues recovered, up 62.6% from FY21. However, the company noted that footfall has not yet returned to pre-pandemic levels.

Superdry hailed an encouraging start to FY23, with traffic moving away from online and back to stores. However, it also warned that increasing cost inflation was likely to put pressure on operating margins. As a result, it now expects to deliver an adjusted pre-tax profit of between £10m and £20m in FY23.

While it has taken action to hedge energy costs, the group expects to see inflation across other areas of the cost base.

Chief executive Julian Dunkerton said: "These are exceptional times for retail and for the economy more generally, and like all brands we’re having to work harder than ever to drive performance. Against that backdrop, I am pleased that we managed to return the business to full-year profit, driven by increased full price sales, whilst also making strong strategic progress. I’m proud of the strides our team has made, delivering great product while also making a step-change in our social and digital capabilities and real progress towards our sustainability objectives.

"Superdry is a premium, affordable, brand, which should mean we are well-positioned as customers think more carefully about their purchases. That said, given the current challenging conditions, we continue to run the business prudently while remaining focused on delivering our strategic goals."

At 0905 BST, the shares were up 11% at 113.40p.

Victoria Scholar, head of investment at Interactive Investor, said: "This morning’s update comes as a welcome reprieve for investors in Superdry who are suffering with a near 60% slide in the share price even after today’s bounce. However Superdry still faces the challenges of cost inflation which has been exacerbated by the strength of the US dollar and weakness for sterling.

"It looks like this will be a difficult year for retail with consumer discretionary set to struggle amid a slowing UK economy and a weakening consumer. The pandemic online shopping boom has ended, and high street sales are unlikely to plug that hole. This is a symbolically and fundamentally important moment for that company which has managed to swing from loss-making to profitability. Whether it can maintain its positive earnings growth amid the growing macro headwinds is yet to be seen."