UK: Accounting error adds to Supergroup profit warning
UK clothing retailer Supergroup Plc has seen more than a third of its share price wiped out today (20 April) after the owner of the Superdry youth clothing brand issued its second profit warning in six months.
Supergroup's share price was down 38.7% to 349.2p at 10:13 BST today after the company blamed an accounting error said it expects full-year pre-tax profit to be around GBP43m (US$69.2m), down on the GBP50-54m it was forecasting in February this year.
Revealing the reasons behind the drop, the company blamed "arithmetic errors" in its forecast of the wholesale business, which amount to around GBP2.5m of its deficit.
It has also been hurt by a GBP2m shortfall due to demand for stock coming in later than expected. However, as this is largely a timing issue, these sales will fall into its next financial year.
While retail sales have been in-line with expectations, the mix of sales has impacted margins, it added.
Another GBP2m in profit has been sacrificed after it "took the decision to increase our operating costs in order to ensure that we had the correct product at the right time in each of our retail channels, and also, to accelerate investment in our management team."
This is not the first time that Supergroup has seen operational issues hit profits, with the company issuing a profit warning in October after a glitch in a new warehouse management system was forecast to wipe up to GBP9m off its full-year income.
"This latest calamity in SuperGroup's short life as a listed company is not going to be well received today and the shares will come under severe pressure," said Singer Capital Markets analyst Matthew McEachran.
"We had put faith in the growth story but are placing our estimates and recommendation under review after this latest issue."
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