Superdry blames the weather, product mix as sales drop

In the 13 weeks to 26 January 2019, group revenue declined 1.5% to £269.3m as store sales fell 8.5% to £126.8m. Global brands revenue was up 5.4% on the same quarter a year ago, driven mostly by a strong performance from wholesale, where sales were 12.7% higher at £73.5m.

E-commerce sales, meanwhile, were down 0.7% to £69m.

The company said group revenue was hit by subdued store and e-commerce sales on the back of ongoing legacy product issues and continued unseasonably warm weather throughout the quarter.

Superdry, which is looking to reduce its reliance on cold-weather clothing, said the product diversification and innovation programme launched in summer 2018 has continued at pace and the early results will be seen in the autumn/winter collection for this year and the launch of kidswear.

Chief executive Euan Sutherland said: "Superdry's performance has remained subdued during quarter three. We continued to be impacted by the ongoing product mix and relevance issues we have previously highlighted and by the lack, until the end of quarter three and the start of quarter four, of any prolonged period of cold weather in our key markets.

"We are pleased with the early progress being made with our transformation programme, designed to reset the business and deliver a return to higher levels of growth and profitability."

At 0935 GMT, the shares were down 0.1% at 508p.

Russ Mould, investment director at AJ Bell, said: "Today’s weak third quarter update from high street fashion retailer Superdry is hardly likely to dissuade founder Julian Dunkerton from his efforts to seize back control of the company.

"No doubt the reasonably mild winter, at least until more recently, contributed to weak trading given Superdry’s reliance on selling coats and heavier clothing. However, you have to question a strategy which leaves the company so at the mercy of fluctuations in the weather.

"All eyes will be on Dunkerton now and what his next move might be."

Shore Capital said that after two profits warnings in late 2018, the trading update shows stability as management tackle ‘legacy’ issues in both product range and the store estate.

"Today’s Q3 trading is somewhat of a mixed bag but in our view, management have a grip on the legacy issues and together with new appointments as creative director and merchandising director the team is now in place to drive change and rebuild profitability and broaden the customer base.

"Today’s update is a step in the right direction of the Superdry transformation programme. All eyes will now be on the founder Julian Dunkerton and what his next move might be in terms of trying to return to the business after his exit last Spring."