Superdry warns on profits; cites challenging environment, warm weather

Clothing retailer Superdry issued a profit warning on Tuesday as it said it was hit by a challenging trading environment and warm weather.

Superdry said in an update that the external environment has proven "challenging" and trading has been "significantly" below management expectations, with full-year profits "expected to reflect this weaker trading seen to date".

The first half was characterised by a challenging consumer retail market and an "abnormally mild" autumn, the company said, which meant there was delayed uptake of its Autumn/Winter 23 collection.

Retail sales fell 13.1% year-on-year, with both stores and ecommerce dented by the warmer weather, as well as a later start to the company’s end-of-season summer sale. The online segment was also impacted by a profit-focused reduction in spend on digital marketing.

Wholesale sales were down 41.1% year-on-year, meanwhile. Superdry said that to some extent this was expected due to the decision to exit its US wholesale operation.

Despite some more encouraging trends, sales in the six weeks since the half-year are still down around 7% on a like-for-like basis.

Founder and chief executive Julian Dunkerton said: "Whilst we have seen modest signs of improvement through the recent spell of colder weather, current trading has remained challenging, and this is reflected in the weaker than expected business performance.

"The operational progress we have made in the first half has been more encouraging with the IP sale for the South Asian region and strong progress on our cost efficiency programme."

At 0840 GMT, the shares were down 13% at 36.55p.

Victoria Scholar, head of investment at Interactive Investor, said: "Superdry has had a very tough time lately with the stock down over 75% year-to-date. It has suffered amid the weak consumer backdrop and from unseasonable warm weather in Autumn. Plus its shares were recently suspended after it missed a deadline for reporting its annual accounts which wasn’t a great look in terms of instilling confidence.

"Pressures facing retail such as the cost-of-living crisis, rising interest rates and inflationary cost pressures seem to have separated the winners from the losers in the sector. While some like M&S and Next have fared very well, others like Superdry have not.

"Once a highly successful streetwear brand loved by celebrities and fashionistas alike, Superdry has struggled to maintain its allure even with the return of Dunkerton as CEO. Its price point is stuck somewhere in no man’s land, above the online fast fashion super low price point offering but below the luxurious ‘splash out’ territory."