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".