Superdry shares plunge as retailer warns profits hit by summer heatwave

Stock drops to three-year low as brand says £10m will be wiped off profits next year

The company said foreign exchange rates would also increase costs (Reuters)

Shares in fashion brand Superdry dropped by more than 22 per cent on Monday, after the retailer warned £10m would be wiped off profits next year, due to recent warmer weather.

The company said “unseasonably hot” weather conditions in the UK, Continental Europe and on the east coast of the United States have “significantly affected demand for autumn/winter product”, in particular for sweatshirts and jackets, which account for around 45 per cent of Superdry's annual sales.

The firm also said foreign exchange rate changes would lead to an additional £8m in costs, because “historic foreign exchange hedging mechanisms that Superdry had put in place have not provided the same degree of protection as expected”.

Euan Sutherland, chief executive of Superdry, said: "Superdry is a strong brand with significant growth opportunities, backed by robust operational capabilities, but we are not immune to the challenges presented by this extraordinary period of unseasonably hot weather.

"We are well prepared for peak trading, but the second half of financial year 2019 presents both risks and opportunities.”

He added: "We continue to focus on delivering efficiencies and cost savings to meet the current challenges and have confidence in our strategy for growth and so are accelerating investments in our future.

“There are significant opportunities ahead for Superdry in terms of geographical market expansion, category extensions and growth and the ability to leverage its multi-channel operating model in a digital world to deliver to customers in whichever way suits them best."

The stock fell to 788p on Monday morning, having closed at 1,015p last week, its lowest level since March 2015.