SuperGroup in new profit warning after maths error
Fashion chain admits accidentally entering 'plus' instead of 'minus' in forecasting data
The fashion retailer SuperGroup was forced to don a dunce's hat in the City yesterday after it admitted to "arithmetic errors" in its wholesale business, which contributed to another disastrous profit warning.
Chas Howes, the outgoing finance director at the owner of the Superdry brand, discovered an erroneous plus rather than a minus figure in forecasts for the group's wholesale business.
This was a key reason for the retailer warning of a shortfall of about £8m in its forecast annual profits.
SuperGroup's third profit warning since October sent its shares plummeting to an all-time low and dealt a further body blow to its credibility with the City, with the independent analyst Nick Bubb describing it as a "calamity".
SuperGroup, whose chief executive is Julian Dunkerton, floated at 500p in March 2010. Its shares reached 1,820p last year but yesterday they plummeted by 38 per cent, or 217.7p, to 351.8p.
SuperGroup explained there had been "arithmetic errors in our forecast of the wholesale business amounting to some £2.5m". Its wholesale business is largely its franchise operation overseas.
The company declined to comment yesterday on whether Mr Howes will remain at SuperGroup after he steps down from the board on Monday, as it stated when it unveiled his successor, Shaun Wills, last month. When Mr Wills, the former chief operating officer at Habitat, joins next week he will have to quickly start whipping its financial reporting processes into shape. Jonathan Pritchard, an analyst at Oriel Securities, said that SuperGroup's finance department is "clearly not fit for purpose".
The retailer also provided a series of other reasons why it now expects profits of £43m for the year to 29 April instead of the £51m that analysts had forecast. In an unusual statement for a listed retailer, SuperGroup said its "wholesale business is multi-dimensional, experiencing high growth levels and, given our rapid expansion and lack of history, it is difficult to predict accurately".
The retailer cited a £2m shortfall due to the timing of introducing new stock into its franchise and wholesale operations, which means the majority of these sales will fall into its next financial year.
SuperGroup said its retail margins in the UK have also been hit by it selling more stock through discount channels, such as eBay, which, combined with higher costs, will contribute to another £2m deficit in profits.
John Stevenson, an analyst at Peel Hunt, said: "With another profit warning that questions management control and market communication, we have no confidence in delivery or market expectations, and struggle to see the shares as being investible."
SuperGroup blamed an upgrade to a warehouse system, which led to a "significant" shortage in certain clothing sizes in stores, for a profit warning in October. It attributed discounting by its rivals for another warning in February.
Mr Stevenson expects downgrades to consensus forecasts of up to £15m for SuperGroup in 2012-13 to as low as £50m. But SuperGroup said the factors cited in the profit warning would have a "minimal impact on our projections for financial year 2013".
Liam Neeson's Downton dreams
Thriller is set in the secret world of British espionage
Bomber jacket worn by Mary Berry sells out within an hour
Much-loved cartoon character returns - without Sir David Jason
Actress to appear in second series of the hugely popular crime drama
- 2 Scottish independence: Five reasons Salmond is secretly hoping for a 'No' vote
- 3 Isis plan to 'behead random member of the public' in Sydney thwarted by Australian police
- 4 Scottish independence: Andy Murray backs Yes campaign in eleventh hour decision
- 5 Have you heard about the film Singapore has banned its people from watching? Well, you have now
Thailand beach murders: Thai PM suggests 'attractive' female tourists cannot expect to be safe wearing bikinis
Scottish independence referendum live: Latest news as Scotland votes Yes or No
Scottish independence: Final opinion polls show undecided voters could swing result either way
Scottish independence: Almost half of No voters have felt 'personally threatened' by the Yes campaign
Isis plan to 'behead random member of the public' in Sydney thwarted by Australian police
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence referendum: A nation divided against itself
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
iJobs Money & Business
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...
To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...
Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...