Superdry warns over profits as warm autumn chills sales of winter ranges

The fashion chain has been cutting costs, clearing stock and selling off assets this year as part of efforts to boost profits.

Superdry has warned its profits will be worse than expected (Ian West/PA) (PA Archive)

Shares in Superdry have plummeted to an all-time low after the retailer warned its profits will be worse than expected, blaming a tough consumer retail market and abnormally warm autumn weather delaying sales of its crucial autumn/winter range.

The update from the fashion chain sent its share price tumbling by about a fifth on Tuesday morning, hitting about 30p per share, the lowest level since it began trading in 2010.

The business has been cutting costs, clearing stock and selling off assets this year as part of efforts to boost profits.

But a warm spell across the UK and Europe during September spoiled sales for the brand, known for its jackets and hoodies.

Retail sales fell by 13% over the six months to the end of October, with shopping impacted by the weather as well as a later start to its end-of-season summer sale.

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

Julian Dunkerton, Superdry's founder and chief executive

Online shopping was also affected by the group reducing spending on digital marketing, it said.

Wholesale, where the business sells its products to other retailers, tumbled by more than 40% year-on-year, which Superdry said was partly expected after deciding to exit its US operations.

Despite colder temperatures sweeping the continent in recent months, it revealed that sales remained down by about 7% over the past six weeks, compared with last year.

Trading has been “significantly” below expectations, and profits for the year are expected to reflect the weaker sales, Superdry warned.

Julian Dunkerton, founder and chief executive of Superdry, 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.”

Mr Dunkerton returned to lead the retailer in 2019 after a boardroom battle which saw him criticise the previous management for presiding over the chain’s decline.

In September, Superdry reported deepening losses after reflecting on an “exceptionally challenging” year, with it agreeing to borrow more than £100 million from lenders over the past year.

But it is in the midst of a turnaround plan to improve performance, and is on track to make £35 million in cost savings within the latest financial year.

The firm also received about £30 million from the sale of its South Asian intellectual property assets, after agreeing to a joint venture deal with Indian retailer Reliance Brands.

Earlier this year, Superdry said it was closing eight UK franchised stores but denied that the move was part of its cost-saving efforts.