Superdry reports deepening losses after ‘exceptionally challenging’ year

The company said its turnaround plan, including a £35 million cost savings target, was putting it on a ‘much firmer footing’.

The retail group has set a target of £35 million in cost savings (PA) (PA Archive)

Fashion retailer Superdry has reported deepening losses and dwindling sales after an “exceptionally challenging” year which saw it move to slash costs across the business.

The company has agreed to borrow more than £100 million from lenders over the past year and has implemented a turnaround plan which it said was putting it on a “much firmer footing”.

But the retailer and clothing brand reported a statutory pre-tax loss of £78.5 million in the year to the end of April, plunging from a £17.6 million profit last year.

On an adjusted basis, pre-tax losses widened slightly to £21.7 million.

The good news is that despite the external turbulence, the brand is in sound health and has momentum

Julian Dunkerton, Superdry's founder and chief executive

It said that a more cautious outlook from its retail partners had led to weaker spending and therefore falls in wholesale revenues.

Stores such as Next, Sports Direct, and John Lewis stock Superdry products, which include shirts, T-shirts and hoodies emblazoned with the brand’s logo.

“The good news is that despite the external turbulence, the brand is in sound health and has momentum”, insisted Julian Dunkerton, Superdry’s founder and chief executive.

Nevertheless, group sales slumped by more than 18% in the three months to the end of April, driven by wholesale revenues more than halving.

Extreme weather events across the UK and Europe had a negative impact on its spring and summer collection, Superdry said, while its autumn and winter collection has been selling better earlier in the season.

Yearly revenues edged up by 2.1% to £622.5 million year-on-year.

The start to the new year has been tough, not helped by unseasonal weather and highly promotional markets, and I’m not expecting the consumer environment to become any easier soon

Julian Dunkerton

Meanwhile, the retail group has set a target of £35 million in cost savings in efforts to shore up more cash.

It said the savings will be achieved through actions such as “estate optimisation”, which could mean store changes or closures, logistics and distribution savings, and continuing to reduce its clothing range.

It said it had already taken the “difficult decision” to reduce the headcount at its head office.

The company secured a loan facility of up to £80 million for over three years in December, and a separate loan of up to £25 million last month.

Mr Dunkerton said: “This has been a challenging year for Superdry, but I do believe that as a result of the decisions we have taken and the actions implemented, we find ourselves on a much firmer footing.”

He added: “The start to the new year has been tough, not helped by unseasonal weather and highly promotional markets, and I’m not expecting the consumer environment to become any easier soon.

“However, the actions we have taken and continue to take to ensure the health of the business, give me more confidence as we look into the future.”

The retailer said it does not expect to see significant growth for the year ahead as it focuses on cost savings and improving profitability.

Shares in Superdry remain suspended after the business failed to meet a deadline earlier this week to publish its full-year financial years.